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  • J.C Penney Braces For 2013 After Posting A $552 Million Q4 Loss 0 comments
    Mar 12, 2013 8:14 AM | about stocks: JCP, M, TGT, BONT

    The fourth quarter has not been a promising one for the already struggling J.C Penney Company, Inc. (NYSE: JCP). This quarter has done little to provide any sort of hope to CEO Ron Johnson. After earning $291.4 million a year ago, which comes to about $1.28 per share, the company lost $552 million, which comes to $2.51 per share. This translates to a loss of $427 million which amounts to $1.95 per share.

    In operation for over a century, J.C Penney's first signal that indicated the loss of consumer confidence was in-store sales. This figure dropped by 31.7 percent, which confirmed claims analysts made regarding its position in the market. Revenue fell to $3.8 billion, which was a 28.4 percent decrease compared to last year.

    Even though the numbers define gloomy prospects for the giant department store, CEO Ron Johnson is doing everything in his power to get customers back through the doors. He is offering various coupons and has introduced great clearance sales in order to entice consumers. This year is supposed to be a crucial year for the company and both management and consumers are aware of this make-or-break scenario.

    Mr. Johnson is adamant about revamping stores across the nation and giving them a new face. This approach incorporates carrying various branded designers that will hopefully bring consumers back to JCP. This sudden change in the store's approach to doing business may have left out some of J.C Penney's loyal customers because no tests were done to analyze customer sentiment. While JCP struggles to gain market share, its major competitors like Wal-Mart Stores Inc. (NYSE: WMT), The Bon-Ton Stores, Inc. (NASDAQ: BONT), Macy's, Inc. (NYSE: M), and Target Corporation (NYSE: TGT) are on their way to increasing market share.

    The question is whether J.C Penney is liquid enough to bear the brunt of customers flocking to other department stores. If the company has enough cash reserves, it just may be able to ride out the storm and see whether all the changes will bring it back to the forefront of the department store market. With a significant decrease in cash starting at $1.5 billion a year ago and ending up at $930 million, investors are nervous about what 2013 will hold for J.C Penney.

    Mr. Johnson stated in his podcast that there were mistakes made in the previous year because the company was unable to realize what its customers really wanted. Now it knows that consumers want sales, good clearance racks, and affordable pricing. That is why in 2013, JCP will implement a lot of these marketing and pricing tactics in order to regain its momentum.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: Retail Stocks: JCP, M, TGT, BONT
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