Why Investors Are Confident Of J.C. Penney Company, Inc. (NYSE:JCP) Turnaround?
Following the earnings release on November 20, 2013 the stock of J.C. Penney Company, Inc. (NYSE:JCP) surged 8.38% and yesterday it plunged over 2.85%. Though investors cheered the stock, the results were not-so-celebrating as the struggling retailer posted loss of $489 million or $1.94 per share for the quarter ended November 2nd, compared to loss of $123 million or about $0.56 per share, in a prior year quarter.
Even quarterly revenue for stores open at least a year fell 4.8% on a year over year basis. Only thing that might have been cheered by investors was the company’s disclosure of first monthly gain in revenue since December 2011, at stores opened at least a year. Even sales and margins have also been improving in the latest quarter.
Overall revenue dropped over 5% to $2.78 billion, in line with analysts’ expectations of $2.79 billion. Profit margins also got hurt due to heavy discount company needed to offer to clear the mounts of merchandise purchased under its former management.
The Positive Outlook
At $9.17, slightly less than one-fourth of its sales, stock of J.C. Penney Company, Inc. (NYSE:JCP) offers value to equity buyers, says Dana Blankenhorn, a contributor at The Street. He backs this argument stating most retailers’ trade at about half their annual sales. Moreover the sales will also boost in the
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current quarter as it includes the holiday season. Last year JC Penney has sales worth $3.88 billion during the Christmas quarter.
Myron Ullman, Who join in as Chief Executive Officer at J.C. Penney Company, Inc. (NYSE:JCP) in April 2013 also noted, “The turnaround at J.C. Penney is beginning to take hold.”
like Macy’s, Inc. (NYSE:M) and Dillard’s, Inc. (NYSE:DDS) that operates through malls, have reported
better than expected sales than stores like Kohl’s Corporation that operate outside malls. The better mall traffic could also favor J.C. Penney Company, Inc. (NYSE:JCP) along the holiday season in its most recent quarter.