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- The spillover effect from the "Indian Summer" is delaying the purchase of warmer clothes into the holiday quarter.
- The year-ago comparable period is an easy one to beat and could mean an impressive headline.
- Evidence has emerged that JCP has got its marketing savvy back.
J.C. Penney - Q3 Earnings Report Leaves Shareholders Doubtful Of Long-Term Recovery
- In its Q3 earnings report on November 12th, J.C. Penney reported losses of $0.62 per share and revenue of $2.76 billion.
- Q4 earnings will be first measure of potential long-term success for J.C. Penney.
- If stock prices rise in the coming months and high short interest in the stock holds, the potential for short-squeeze plays increases.
J.C. Penney: Debt And Inventory Numbers Reinforce Pessimism
- J.C. Penney's debt and inventory metrics are notable worse than that of the competition.
- Singular lack of operational flexibility and financial cushioning severely hamper the odds of a successful turnaround.
- Traders who can handle volatility are welcome to short the stock for near certain-gains over longer time frames. The rest should cut ties with J.C. Penney.
J.C. Penney: Overvalued At $7 Unless It Can Get Growth Back On Track
- Most arguments about why J.C. Penney's stock should be higher after Q3 2014's earnings are unconvincing.
- J.C. Penney already is significantly overvalued compared to Macy's and needs 9% to 10% revenue growth to get to the same EV/EBITDA level at current prices.
- J.C. Penney has restored its active customer count but has lost a significant share of wallet.
- Q1 to Q4 growth trends are quite weak and show no improvement in three-year stacked comps.
- Better than low-single digits growth is necessary for J.C. Penney's stock to have meaningful upside.
Update: Is J.C. Penney's 'Recovery' About To Go Up In Flames?
- J.C. Penney reported Q3 earnings that show year-over-year sales weakness.
- However, margins have improved.
- As I predicted the company is having trouble improving its sales figures, which will pose a problem longer term.
- There is significant support at ~$7/share, but the fundamentals don't support a new bull market.
- J.C. Penney missed its lowered sales guidance during Q3 2014 and gave weaker than expected guidance for Q4 2014.
- Gross margin improvement also appears to have hit a wall at a 36% annualized rate.
- Cost control is good, as SG&A was better than expected.
- J.C. Penney can stay afloat for a long time, but the case for owning the stock has taken some serious blows.
- Bonds are a better investment than the stock for those wanting to be long J.C. Penney.
Update: J.C. Penney Sales A Bit Light In The Off-Season - Shrug It Off
- JCP reported fiscal third quarter results.
- The results neither increased nor decreased my level of confidence in JCP.
- The results were in line with my expectations.
- J.C. Penney reported disappointing third quarter results with flat sales and comps.
- J.C. Penney updated its full-year comp guidance to 3.5-4.5%.
- Shares of the retailer sold off sharply after hours, trading down 5.3%.
- I highlight why investors shouldn't lose their cool amid one or two softer quarters.
- J.C. Penney is set to report third-quarter earnings on Wednesday, November 12 after the market closes.
- Wall Street is forecasting that JCP will lose 83 cents per share, while the Estimize community is predicting a loss of 78 cents per share.
- The Estimize community is looking for J.C. Penney to cut its third-quarter losses by 57% compared to last year.
- October has been a tough month for many retailers.
- However, analyst expectations for Q3 2014 revenues are down 2.4% from early October, leaving J.C. Penney with a reasonable chance of being able to meet expectations.
- Gross margin needs to be up above 37% given the slower sales growth.
- Maintaining full year guidance leaves a large range of possibilities for Q4 results.
- Changes in guidance often lag behind changes in sales trends.
- Investors are struggling with how to price J.C. Penney's shares: a cash burn scenario or a turnaround possibility.
- We think owning J.C. Penney's stock is like owning a lotto ticket. There could be a huge payout, but the odds aren't in investors' favor.
- Long-term investors should be thinking about what the next economic recession might mean for J.C. Penney. The company may not make it through.
- J.C. Penney's shares have lost 15% year-to-date, and retreated 31% from their 52-week high at $11.30.
- J.C. Penney's third quarter comp revision is only a minor issue and does not mean the turnaround is being called off.
- Equity market sell-off in September/October only made little sense to begin with.
- Prediction: Investors will likely reverse course and seek out riskier investments like equities in the coming quarters, which should help J.C. Penney.
- JC Penney has had a change in power yet again with Marvin Ellison taking over as CEO.
- Revenues for JC Penney amounted to $2.8 billion for the 2nd quarter of 2014.
- Net losses and negative cash flows have declined over the year as performance improved.
- The company is hoping to implement a broad-based plan with partnerships with food and retail clothing outlets.
- Growth prospects for the company are looking weak and investors will definitely be better off by unloading this stock.
J.C. Penney: A Review Of Future Capital Expenditures
- J.C. Penney's capital expenditures are significantly lower than historical averages right now.
- Due to the store renovations during the Ron Johnson era, there is likely limited need for additional updates and renewals for several years, making lower capital expenditures reasonable.
- By 2019 though, it is likely that capital expenditures will rise back to the $425 million to $525 million range.
- J.C. Penney needs to reduce interest expense (or store count) in the interim five years, otherwise $825 million to $925 million EBITDA is needed for breakeven cash flow.
J.C. Penney: Free Cash Flow Could Be Lower In 2015 Than In 2014
- 2014's positive free cash flow is driven by working capital changes and the sale of real estate.
- Without that benefit, even solid revenue growth and gross margin improvement could lead to reduced or negative cash flow.
- For example, +3% comps in 2015 combined with a 36.5% gross margin and a slight reduction in SG&A would result in slightly negative free cash flow.
J.C. Penney: Valuation Has Settled Into A Reasonable Range
- J.C. Penney's price has fallen due to lower Q3 growth guidance.
- Current price is now low enough that J.C. Penney has a solid chance of growing into its valuation.
- Value of $6 to $9 per share if J.C. Penney can reach $13 billion in sales.
- J.C. Penney's growth targets of mid-single digits appear optimistic, but gross margin and SG&A targets appear achievable.
- J.C. Penney is worth $19.22 per share.
- J.C. Penney’s omnichannel opportunity is greater than a billion dollars and is underappreciated by the street.
- Looking out over 1-3 years, U.S. consumer balance sheets will strengthen, wages will rise, and spending will significantly increase retail sales.
- Kohls’ dismal leadership, mediocre omnichannel proposition, and lack of full out store remodeling create a material opportunity for JCP to gain share.
- The death of Sears provides an excellent opportunity for top line growth.
J.C. Penney: Is This Christmas Season The Company's Last Chance?
- September sales figures disappointed and the company is facing an uncertain economic environment heading into the critical holiday season.
- J.C. Penney is counting on store redesign, low-cost goods and an increased focus on younger customers to lead the turnaround.
- Slowing economic growth, Ebola and a weakening retail sales environment will all be headwinds for the company.
- A disappointing holiday season could force the company to make some tough decisions.
It Is Too Early To Bet On The Story At J.C. Penney
- J.C. Penney has reported improved financial results in FY2014, including its third straight fiscal quarter of positive comparable store sales.
- Unfortunately, the company continues to report operating losses, a trend that has weighed on its stock price in 2014.
- With the company recently lowering its sales outlook for the full year, J.C. Penney's operating momentum seems to be waning and investors should probably avoid the story.
Today, 12:07 PM
- J.C. Penney (JCP +3.7%) says a strong start to the Black Friday shopping weekend leaves it "well-positioned" to compete for the duration of the holiday period.
- The company struck more sales than a year ago with its 5:00 p.m. opening time on Thanksgiving an obvious significant factor.
- Hot categories included kitchen electrics, towels, fine jewelry, sleepwear, and Disney toys and apparel (a common theme across retail).
- Some independent channel checks are less rosy, citing JCP as having only moderate traffic compared to some peers.
Mon, Nov. 24, 12:01 PM
- Some data mining by WalletHub gives a sneak peek at which retailers are above and below the sector average of 39.5% on Black Friday discounting off of typical pricing.
- Retailers with above-average discount activity: J.C. Penney (NYSE:JCP) 65.44%, Macy's (NYSE:M) 63.52%, Rite Aid (NYSE:RAD) 53.34%, Sears (NASDAQ:SHLD) 50.19%.
- Retailers with below-average discount activity: Costco (NASDAQ:COST) 21.14%, Big Lots (NYSE:BIG) 25.24%, Amazon (NASDAQ:AMZN) 26.10%, Best Buy (NYSE:BBY) 32.08%.
Fri, Nov. 14, 9:15 AM
Thu, Nov. 13, 3:47 PM
- Shares of J.C. Penney (JCP -8.7%) fall sharply after the retailer's same-store sales track fails to impress investors.
- Company execs tried to make the case during the firm's earning call that the loss of brands from the Ron Johnson era made the comparable tough.
- Some analysts think the flat comp delivered by JCP in Q3 puts it off track on the course back to profitability by 2017.
Thu, Nov. 13, 9:10 AM
Wed, Nov. 12, 4:17 PM
- J.C. Penney (NYSE:JCP) reports same-store sales were flat in Q3.
- SG&A expenses fell 1.8% to $988M during the quarter.
- Gross margin rate +710 bps to 36.6% on an improved mix and level of clearance sales.
- Merchandise inventory - 10.4% to $1.289B.
- The retailer cites home, fine jewelry, and Sephora as areas of strength.
- Online sales weren't broken down by JCP as has been customary.
- JCP -0.8% AH after gaining 7.8% before the bell.
Wed, Nov. 12, 4:16 PM
Tue, Nov. 11, 5:35 PM
Mon, Nov. 10, 10:08 AM
- A negative article in Barron's on J.C. Penney (JCP -5.9%) appears to have soured sentiment on the retailer.
- The company's high level of debt and fading sales momentum don't bode well for the turnaround story, warns Jack Hough
- A tough pill for investors to swallow will be if JCP trails the current 3.8% pace of same-store sales growth in the quarter by peers despite bumping up against soft comparables.
Thu, Nov. 6, 1:27 PM
- Apparel seller Ann issued a warning today on the impact of labor uncertainty at West Coast ports as part of its Q4 guidance.
- The retailer expects $8M in extra air freight costs due to product shipment delays.
- There's also been some reports of delays at ports in the Seattle and Tacoma area which account for 16% of container cargo traffic on the West Coast.
- Analysts fret that more companies will resort to air freight to ensure stores are stocked in front of the Black Friday rush.
- Apparel and footwear stocks: SKX, FL, VRA, ICON, NKE, WWW, DECK, CROX, SHOO, BWS, KATE, ANN, PERY, LULU, RL, PVH, VNCE, CRI, UA, HBI, VFC, COLM, KORS, GIL, SQBG, JCP, KSS, DDS, M, JWN, RL.
Mon, Nov. 3, 3:32 PM
- Internet companies are taking space from mall retailers in more ways than one.
- As online sales continue to account for a higher percentage of total retail sales every year, in an ironical trend, data centers and server farms are settling into the abandoned mall space left behind as brick-and-mortar shops trim their square footage.
- Sears Holdings (SHLD -5.1%), J.C. Penney (JCP -0.9%), and Target (TGT -0.4%) are on the list of retain chains which have seen their clothing racks replaced by servers.
Sat, Oct. 25, 12:34 PM
- Labor issues and a shortage of trucking equipment at the critical port complex in the Long Beach, California region threaten to disrupt shipments of holiday products to retailers.
- Delays are running up to two or three weeks, according to port officials.
- What to watch: Retailers potentially impacted by the port turmoil include Wal-Mart (NYSE:WMT), Macy's (NYSE:M), Kohl's (NYSE:KSS), J.C. Penney (NYSE:JCP), Ralph Lauren (NYSE:RL), American Eagle Outfitter (NYSE:AEO), Nordstrom (NYSE:JWN), and Carter's (NYSE:CRI).
Wed, Oct. 15, 10:56 AM
- There's a promising forecast out from retail watchers Verdict on the department store sector.
- The research firm forecasts growth of 22% to $450B as emerging markets drive gains.
- What to watch: British and U.S. chains have an advantage over continental European operators which have been slower to invest in e-commerce.
- Department stores: M, OTCQX:MAKSY, OTCPK:DBHSY, KSS, JWN, DDS, JCP, LB, TLYS, SHLD
Mon, Oct. 13, 9:57 AM
- Martin Ellison, JC Penney's (NYSE:JCP) new CEO-designee, is well respected on Wall Street, Piper says in a note this morning.
- Firm calls Ellison a "solid choice," noting the cost savings and increased productivity he achieved at Home Depot.
Mon, Oct. 13, 9:15 AM
Mon, Oct. 13, 8:37 AM
JCP vs. ETF Alternatives
J.C. Penney Co Inc is engaged in selling merchandise and services to consumers through its department stores and through its website jcp.com. It mainly offers apparel, footwear, accessories, and fine and fashion jewelry.
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