JC Penney Doesn’t Get Investors’ Hopes Up

Jacob Harper |

JC Penney stock, retail stocks, sales forecast, same-store sales, JCPRetail giant JC Penney (JCP) stumbled in Wednesday trading action after issuing a lower-than-expected sales forecast. The resulting market activity was erratic favoring pessimistic, with the resulting investor sell-off getting severe enough to warrant a brief trading halt.

The story of one of the nation’s largest brick-and-mortar stores has captivated investors for years, as the company continues to mount a slow recovery from the Ron Johnson era. Johnson, a former Apple exec who tried to perform a complete makeover of JC Penney’s image and approach to capture a younger, hipper audience failed in a spectacular fashion. An elimination of the coupon/seasonal sales strategy that had for decades been the store’s hallmark alienated its base while failing to attract the desired upper-end audience, and in turn the store tanked.

Since former CEO Mike Ullman took back over from Johnson in April 2013, JC Penney had started to slowly yet surely regain market share and stave off the losses. The company has also been able to avoid having to sell off the estimated $4.06 billion in real estate they hold, real estate that if liquidated would be a boon to investors band creditors but would also signal the end of the brick-and-mortar business.

Despite putting their stores and real estate on the line to save the business, things had been looking up for the chain, with revenues increasing and shares of the company more than doubling from February 2014 to September 2014. However, the recent gains were greatly offset following the poor revenue forecast.

How poor? After previously calling for mid single-digit same-store growth, JC Peney revised that down to low single digit growth. Analysts had previously called for 5.3 percent uptick. 

Same-store sales are traditionally one of the most scrutinized statistics used to size up the overall health of a retail chain. And while JC Penney had previously made good advances in shoring up that number, the warning that growth would not be as robust as expected greatly tempered investor’s expectations that the company was finally fully recovered from the disastrous Johnson era.

By 2:30 PM EST shares of JCP had fallen 11.86 percent to hit $8.10 a share.

 

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Companies

Symbol Name Price Change % Volume
JCP J.C. Penney Company Inc. Holding Company 10.56 0.12 1.15 15,248,644

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