J. C. Penney Company, Inc.
) nudged up 1.2% to close at $8.23 on Nov, 8, 2013, after CEO
Myron Ullman announced upbeat comparable-store sales results for
the month of October.
Comps rose 0.9%, increasing 490 basis points from September. The
improvement was driven by restoration of inventory levels of its
significant brands such as St. John's Bay, Stafford, and jcp Home
(TM). Brands such as Levi's, Nike, Carter's, Dockers, Alfred
Dunner, Vanity Fair, and IZOD also generated considerable sales.
The Plano, Texas-based retailer announced that sales on jcp.com
for the month under review increased 37.6% year over year on the
back of constant improvement in the company's online platform.
The home merchandise division registered online sales growth of
50% year over year. Sales in Home categories represented
nearly half of the total .com sales for the month of
October. Women's, Men's and Children's apparel were also
The company hinted that gross margin for the third quarter (with
October witnessing highest margin levels) increased from the
J. C. Penney also unveiled 30 Sephora stores in October, bringing
the count to 446.
Earlier, J. C. Penney had revealed that its key sales barometer
improved in September from the prior month and is expected to
last through the remainder of 2013, owing to its turnaround
J. C. Penney has been in troubled waters for quite some time,
given its waning revenues and increased losses. The company has
not shown any signs of recovery in the recent past. This is
evident from its 7th consecutive quarter of sluggish results on
Aug 20. The company has been constantly lagging its peers like
) in terms of performance.
However, the company has taken several strategic initiatives to
drive traffic and conversion. The company reverted to promotions,
which could be a successful sales driver this holiday season.
Investors remain cautious about the stock, as the company
endeavors to recover and give itself a major facelift. In a
significant development, the company's board of directors in Apr
2013 discharged the Chief Executive Officer (CEO) Ron Johnson of
his duties after 17 months, as his ambitious transformational
ideas failed to materialize. Consequently, the company's former
CEO, Myron Ullman was reinstated in his post.
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The company will post third-quarter results on Nov 20. However,
our proven model does not conclusively show J. C. Penney is
likely to beat earnings this quarter. This is because a stock
needs to have both a positive
and a Zacks Rank #1, 2 or 3 to beat the estimate but this is not
the case here. Although the stock carries a Zacks Rank #3 (Hold),
it has an ESP of -23.03% (as the Most Accurate estimate
stands at a loss of $2.03 per share, while the Zacks Consensus
Estimate is pegged at a loss of $1.65).
The above view is well supported by J. C. Penney's earnings
surprise history. The latter shows that the company has missed
the Zacks Consensus Estimate by an average of about 523.2% in the
trailing four quarters.