J. C. Penney Company, Inc.
) tumbled to touch a 52-week low of $9.93 on Wednesday, Sep 25,
and eventually closed trade at $10.12. The stock's
year-to-date performance is also disappointing, as it has plunged
Shares of this retail chain have been on a downtrend since the
beginning of August. Given its dismal second-quarter fiscal
2013 results and the numerous challenges that the company faces
at present, the stock has more downside left. J. C. Penney has
been in the red zone since the beginning of fiscal 2013, posting
two successive quarterly losses.
We observe that the decreasing revenues and higher losses are one
of the primary reasons behind the stock's downslide. Moreover,
its restructuring initiatives have been crumbling as well, as the
company is showing no improvement. Alongside, it is constantly
lagging its peers,
) in terms of performance.
For the second quarter, J. C. Penney reported an adjusted loss
$2.16, dashing all hopes of recovery, at least in the near term.
The loss incurred was wider than the year-ago quarter loss of 37
cents. The Zacks Consensus Estimate for the quarter was a loss of
If we look at the earnings surprise history, J. C. Penney has
missed the Zacks Consensus Estimate with an average negative
surprise of approximately 523% in the trailing four quarters.
J. C. Penney's dismal quarterly performance was reflected in the
downward movement in the Zacks Consensus Estimate, as analysts
are increasingly losing hope about the stock's future
performance. The Zacks Consensus Estimate of loss for fiscal 2013
widened significantly in the last 60 days to $5.78 cents per
share from $3.48.
Investors remain wary of this Zacks Rank #3 (Hold) stock as the
company struggles to cope with the falling revenues. In a major
development, the company's board of directors discharged the
Chief Executive Officer (CEO) Ron Johnson of his duties, as his
ambitious transformational ideas failed to materialize.
Consequently, the company's former CEO, Myron E. (Mike) Ullman,
III has been reinstated in his post with immediate effect.
Further, in order to shield itself from takeover attempts, J. C.
Penney implemented a Stockholder Rights Plan - often referred to
as "Poison Pill" - to ward off any effort to gain a controlling
interest in the company by any person or a group of persons,
which could be detrimental to the company or its shareholders.
In the latest development, according to Reuters, J.C. Penney is
seeking to raise nearly $750 million to $1 billion in new equity
to construct stronger cash reserves to gear up for the holiday
season. Management is also looking forward to build a strong
liquidity position in case the company's performance does not
meet the desired expectations.
It remains a wait and watch story whether the initiatives
undertaken could bring back the derailed stock on track, and
rekindle the stock's momentum.
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