JCPenney: Just When Wall Street Thought They Couldn't Do Any Worse...

Michael Teague  |

Beleaguered department store operator J.C. Penney (JCP) reported earnings late on Thursday, indicating that the company had lost more than expected during the first quarter of the year.

In the first quarter of 2013, Penney lost $348 million, or $1.58 per share on revenue of $2.64 billion, compared to the first quarter of 2012, when the company lost $163 million, or $0.75 per share on revenue of $3.15 billion.

The company was hampered by $72 million in expenses related to the restructuring of stores and changes to management that, when excluded, bring the Q1 loss to $289 million, or $1.31 per share, while analysts had expected the company to report an adjusted loss of $0.89 per share on revenue of $2.74 billion.

Last month, Penney ousted former Apple executive Ron Johnson after his attempt to drastically reorganize the store’s image and sales structure backfired horribly, leading to a year during which the company’s income, as well as its shares, tanked in a way that few if any had ever witnessed.

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Johnson was replaced by his predecessor Myron Ullman, who got to work immediately to stem the blood flow. Ullman cleared out a number of Johnson-era executives from the company’s upper management, immediately resumed Penney’s age-old and widely popular sales program that had been scrapped in favor of “everyday low prices”, and secured a $1.75 billion loan from Goldman Sachs (GS) against its $4 billion or so in real estate.

Ullman was also behind an ad campaign in which the company apologized to its shoppers, entreating them to come back and find everything a lot more like it used to be.

Over the last month, Penney’s shares have jumped a much-needed 27 percent, currently trading at $18.79, after having lost more than half their value throughout 2012.

Ullman’s rehiring has brought benefits other than just a swift return to the department store that shoppers had come to love over the years. It may have also saved the company from the otherwise embarrassing and nasty legal situation in which it had found itself embroiled over its deal with Martha Stewart Living Omnimedia (MSO).

Furthermore, the return of Ullman was followed shortly by George Soros’s announcement of a 7.9 percent stake in the company, an invaluable vote of confidence for Penney’s shares.

While the company’s same-store sales had dropped 16.6 percent during the period, JCPenney was certainly not the lone department store to have experienced such a setback. Macy’s (M) and Kohl’s (KSS) both reported lower same store sales, a fact that has been attributed to the expiration of Bush-administration era tax cuts, and delays in the sending out of tax refunds that have hurt consumer spending significantly throughout the quarter.

In late trading, Penney’s shares dipped about 2.3 percent to $18.36, after closing the regular trading day on a 1 percent loss to $18.79.

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