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Mispriced, Misjudged And Misunderstood: The J.C. Penney Story
- Mispriced: J.C. Penney is trading at 37.12% below February 1, 2014 Book Value.
- Misjudged: Restoring historical sales levels in the home category and an average of 8% increment in women's accessories and children's apparel is enough for J.C. Penney to meet guidance.
- Misunderstood: The 5.12% sales increment from 2013-2014, the higher positive same store sales and decreasing total operating expenses for 2014, are all testaments to J.C. Penney's turnaround story.
- J.C. Penny's share price has seen a steep drop since reaching a five-year high in 2012.
- Recent trouble has forced management to consider growth initiatives with a focus on increasing online earnings.
- In a highly competitive, fragmented and economically sensitive industry, the risk to investors is high.
- J.C. Penney has fallen far short of its shareholders' expectations this year.
- At $6 though, it appears that the revenue targets it needs to justify its current value are relatively reasonable.
- J.C. Penney doesn't seem to be a compelling short at $6 any more, but there's still long-term downside risk to its share price that makes it a mediocre long-term holding.
- There may be some trading opportunities at $6, but otherwise those interested in J.C. Penney long-term should consider its bonds or preferred shares.
- Yields are at 11+% right now and J.C. Penney can likely handle a modest decline in business.
J.C. Penney: A Falling Stock Price Doesn't Mean The Turnaround Is Failing
- J.C. Penney's share price has consolidated dramatically since the company's Q3 .
- Despite a softer third quarter, J.C. Penney's sales are up year-to-date and forecast to increase in the fourth quarter as well.
- Investors depend too heavily on JCP's price action to determine whether the turnaround is on track or not.
- Patience is called a virtue for a reason.
- CEO Mike Ullman announced that Black Friday sales were off to a "strong start" but the National Retail Federation said that Black Friday sales were down 11% from last year.
- At this point in the turnaround, J.C. Penney should be reporting same store sales comps in the mid to high single digits. J.C. Penney comps were flat in Q3.
- J.C. Penney continues to struggle as consumers prefer to spend their money on electronics and gadgets like the iPhone 6, tablets and TVs.
- J.C. Penney's so-called recovery has yet to result in any operating profits, and shares have substantially underperformed the market year to date.
- Management continues to destroy shareholder value.
- Management needs to define its target market and prove it can sell to this market or else shares remain a "sell"--resistance is at $7/share.
- J.C. Penney can't turn a profit at $10 billion in sales without major store closures (300+).
- Slight full-year profitability would indicate a value of $7 to $10 per share.
- Q4 profitability is more likely than not and is also expected by analysts. More attention will be paid to comparable store sales growth.
- The true test of J.C. Penney's revival will depend on whether it can deliver profitability in non-Q4 quarters. Achieving that would likely make J.C. Penney worth $14 to $19.
J.C. Penney: Is It Still A Compelling Short? Goldman Sachs Thinks So
- J.C. Penney might publish first positive EPS results in 2015.
- They had the highest percentage of discounts during Black Friday, but is that a good thing?
- If nothing changes, the only way is down.
- J.C. Penney operations have pulled out of their dive.
- The company has been stabilized under Mike Ullman and should turn profitable soon.
- Incoming CEO Marvin Ellison is the nuts-and-bolts guy the company needs.
- If JCP can make even a small profit at $10 billion in sales the stock is worth $5 billion, twice its current price.
We're Not Taking J.C. Penney Seriously This Holiday
- Retail holiday euphoria continues.
- J.C. Penney is reporting a strong start.
- We're not buying it.
J.C. Penney: Statements Without Concrete Numbers Have Limited Meaning
- J.C. Penney mentioned that it had a strong start to the holiday shopping season.
- However, without actual numbers, this statement doesn't provide any meaning.
- Statements have mentioned that sales have been "strong" during Thanksgiving before, but actual November results have been both down significantly and up significantly during those years.
- As well, stores are always reportedly busy during the holiday shopping season. That tells us little about year-over-year performance.
These J.C. Penney Announcements Will Blow Your Mind And Nobody Is Watching
- Everybody is watching JCP's main Twitter account with over 349,000 followers.
- Almost nobody is watching the verified JCP-owned investor news Twitter account with 564 followers.
- The latter is one with the valuable updates, and they will blow your mind.
Why J.C. Penney Is Good To Consider This Holiday Season
- Holiday spending is expected to increase 16% this year, and much of it will happen online.
- J.C. Penney has prepared itself well for this expected growth in spending by strengthening its online operations and merchandise.
- Penney's focus on customer-centric moves such as same-day pick-up and the "Find it, keep it" strategy will help it increase same-store sales.
- The good thing is that Penney's investments in its omni-channel initiatives will help it deliver growth in the long run.
- 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.
Thu, Dec. 18, 7:01 AM
- Apparel prices fell 1.1% in the U.S. during November, according to yesterday's CPI report.
- The drop followed a 0.2% slide in apparel prices for October.
- Retail analysts note that a higher mix of e-commerce sales and the lingering promotional haze threaten margin expansion in the sector, despite overall tighter inventory control.
- Apparel stocks: KATE, ANN, LULU, PVH, VNCE, CRI, UA, HBI, VFC, COLM, GIL, SQBG, JCP, KSS, DDS, M, JWN, RL, ARO, AEO, ANF, WTSL, TLYS, CACH, ZUMZ, PSUN, EXPR, BKE, KORS, UA, GIII, SQBG, HBI, SKX, FL, VRA, ICON, NKE, WWW, DECK, CROX, SHOO, BWS, PERY, DXLG, SHLD, BONT, GPS, GES, URBN.
Fri, Dec. 12, 10:17 AM
- The S&P Retail ETF (XRT +0.5%) is out ahead of market averages again on enthusiasm over consumer spending forecasts.
- Today it's apparel/footwear sellers and department store chains with the broad set of gains.
- Gainers: Lululemon (NASDAQ:LULU) +2.7%, Ralph Lauren (NYSE:RL) +1.0%, Under Armour (NYSE:UA) +1.1%, Sequential Brands (NASDAQ:SQBG) +0.7%, Michael Kors (NYSE:KORS) +0.5%, Coach (NYSE:COH) +2.3%, Nike (NYSE:NKE) +0.7%, Deckers Outdoor (NYSE:DECK) +1.1%, Macy's (NYSE:M) +2.4%, Sears Holdings (NASDAQ:SHLD) +1.7%, J.C. Penney (NYSE:JCP) +1.5%, Nordstrom (NYSE:JWN) +0.8%.
Thu, Dec. 11, 9:30 AM
- Retail sales struck their biggest gain since March on broad strength.
- What's working: Strong growth was seen in auto parts (PBY, ORLY, AZO, AAP, MNRO) with the broad parts category showing year-over-year sale growth of over 8% in November. Sales were up 6.8% Y/Y for health and personal care stores (ULTA, SBH, CVS, WAG, RAD) during the month.
- What's not working: Department stores (DDS, M, SSI, BONT, SHLD, JCP, KSS, JWN) went backwards with sales off 1.1% from a year ago. No surprise, but sales at gas stations (CASY, KR, PTRY) also fell off from a year ago.
- Retail ETFs: XLY, XRT, VCR, RTH, RETL, IYK, FXD, IYC, FDIS, SCC, UCC, PMR, UGE, RCD, SZK.
Wed, Dec. 10, 10:47 AM
- J.C. Penney (JCP -1.5%) says it plans to upgrade its mobile app.
- The investment would appear to be well-justified after J.C. Penney reported close to half of all its Cyber Monday sales were made via smartphone.
- What to watch: The recent trend of shoppers using mobile apps to compare prices has increased the need for sophisticated pricing algorithms on the back end.
Tue, Dec. 9, 10:33 AM
- J.C. Penney (JCP +2.4%) gets a lift after Piper Jaffray names it one of its top retail picks for 2015.
- The mini-rally has only gone part of the way to make up for yesterday's slide after Maxim Group analyst Rick Snyder took some shots at the department store chain.
- Snyder on JCP: "J.C. Penney had little traffic, so little that if one was unaware of the calendar, it would be difficult to guess that it is the holiday season."
- Piper's take on JCP centers on the levers it can pull to improve fundamentals and cash flow.
Thu, Dec. 4, 10:31 AM
- Shares of Destination Maternity (DEST -7.8%) slide after the company misses earnings estimates.
- A frank assessment from the company on a misfire with its assortment to millennial-aged moms-to-be strikes a bit of a chord across the apparel and department store sector.
- Many of the earnings hits and misses this quarter have been tied to on-trend or off-trend assortments. A millennial group which is hard to nail down is becoming a bigger part of that puzzle.
- Apparel stocks: KATE, ANN, LULU, RL, PVH, VNCE, CRI, UA, HBI, VFC, COLM, KORS, GIL, SQBG, JCP, KSS, DDS, M, JWN, RL, ARO, AEO, ANF, WTSL, TLYS, CACH, ZUMZ, PSUN, EXPR, BKE, KORS, UA, GIII, SQBG, HBI, SKX, FL, VRA, ICON, NKE, WWW, DECK, CROX, SHOO, BWS, PERY, DXLG, SHLD, BONT, GPS, GES, URBN, TJX.
Wed, Dec. 3, 10:37 AM
- Shares of J.C. Penney (JCP -3.8%) fall after Goldman Sachs cuts its rating on the department store operator to Sell from Neutral.
- The retailer's comp sales and e-commerce trail rivals despite bumping up against soft comparables, notes GS.
- Pressure from discounters appears to be hampering the JCP turnaround.
- A gloomy $5 price target on JCP is set by the investment firm.
Wed, Dec. 3, 9:09 AM
Tue, Dec. 2, 1:05 PM
- A technical breakdown on the performance of retail e-commerce sites for Black Friday and Cyber Monday reveals some winners and losers.
- Sears (NASDAQ:SHLD), Costco (NASDAQ:COST), Office Depot (NASDAQ:ODP), REI, Saks and NewEgg drew high marks for using responsive web design to create a seamless mobile experience for users.
- Costco and Sears were also on a list of fastest sites - along with Barnes & Noble (NYSE:BKS), W.W. Grainger (NYSE:GWW), Williams-Sonoma (NYSE:WSM), and Hennes & Mauritz (OTCPK:HMRZF).
- The extended holiday was more uneven for Best Buy (NYSE:BBY), Staples (NASDAQ:SPLS), Cabela's (NYSE:CAB), and Forever 21 which had painful outages or slow performance times.
- J.C. Penney (NYSE:JCP) was reported to have had a temporary mobile glitch which caused a slowdown, but also ended up on a list of top website performers.
Mon, Dec. 1, 7:50 AM
- Comscore estimates e-commerce spending rose 32% on Thanksgiving Day to $1.01B and 26% on Black Friday to $1.51B.
- Most retail analysts are sticking with their forecast for 4.0%-4.5% growth for holiday sales this year, with early shopping and e-commerce making up for a dip in store traffic on Black Friday.
- Apparel sellers in particular came out with a stronger online push this year.
- Related stocks: OTCPK:AMZZ, EBAY, AEO, ANF, JCP, JNY, JWN, KSS, LB, M, URBN, PSUN, BKE, WTSL, GPS, FDX, UPS, DKS, BBY, LULU, KATE, VRA, SPLS.
Fri, Nov. 28, 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.
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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