J.C. Penney Company, Inc. (NYSE:JCP)’s Turnaround On Track
While talking at the Women’s Wear Daily conference on Monday, October 28, 2013, J.C. Penney Company, Inc. (NYSE:JCP)’s Chief Executive Officer, Myron Ullman said that the sales trends are improving while reinstating the positive forecast for a rise in same store sales during 3Q13. The stock marked a new intraday high of 8.84% as the CEO said, “I told lenders it would be one thing if we had two things wrong and they couldn’t be fixed. We have 30 things wrong and they can all be fixed.”
In 2012, JC Penney decided to tap upmarket alienated shoppers and spent large amounts on store remodels. However the experiment failed and the company incurred huge losses. Since then JC Penney has been consistently thriving for its turnaround and earlier reported bit decline in its same-store sales for September compared to the August sales. However the CEO’s latest comment pointed positive outlook for the third time in just over a month period.
The constrained economic environment and federal shutdown must have a say in consumer spending and the speculation of low sales during crucial holiday shopping season can certainly press profits of many retailers as well as deals and discount companies like Groupon Inc. (NASDAQ:GRPN). Hence the JC Penney’s positive sales outlook that boosted immediate investors’sentiment must need to be seen from a more holistic consumer spending perspective.
Betting on mobile monetization Groupon also posted 7% revenue growth during 2Q13 with over 45% revenue growth in North America. This growth was supported by almost 50% transactions coming through mobile networks during 2Q13 which is estimated to grow continually. But the growing trend of smartphone users and online shoppers doesn’t guarantee sales growth for sure. Steve Weinstein, a research analyst with ITG Investment Research warned about decline in Groupon’s domestic gross billings during 3Q13 compared to its 3Q12 sales as well as 3Q13 estimates based on weakening domestic trends during the months of August and September.
So when JC Penney CEO is confident about sales growth and ITG analyst predicts declining trends for Groupon, it would be the factual numbers that only can depict the true scenario of sales trends for major US retailers and discount companies. Moreover when the holiday shopping contributes a lot to revenues, the 4Q13 results would be more crucial from investment perspective.