We have maintained our Neutral recommendation on J. C. Penney Company, Inc. (JCP - Analyst Report). Moreover, shares of J. C. Penney currently hold a Zacks Rank #3 (Hold).
Why the Reiteration
J. C. Penney has taken several strategic initiatives to drive traffic and conversion. The company brought back promotions, which we believe could be a successful sales driver as it is witnessing a favorable response owing to the key back-to-school season.
We believe J. C. Penney’s well diversified supplier base, compelling national and private-label brands, effective marketing campaigns, point-of-sale technology initiatives as well as effective cost and inventory management should drive sales and margin trends over the long term. The company is trying every means to uplift itself in order to deliver comparable-store sales growth and boost market share.
However, J. C. Penney once again failed to meet expectations as the company reported its seventh consecutive quarter of sluggish results, dashing hopes of a recovery, at least for the near term. The company remained in the red with adjusted loss per share of $2.16 in the second quarter of fiscal 2013 that widened from the loss of $0.37 in the year-ago quarter. The Zacks Consensus Estimate for the quarter was a loss of $1.13.
J. C. Penney has missed the Zacks Consensus Estimate in the last four quarters by an average of 523.2%. Top line plunged 11.9% to $2,663 million and fell short of Zacks Consensus Estimate. Comparable store sales decreased 11.9% year over year as its earlier pricing and marketing strategy failed to lure customers. J. C. Penney witnessed a 5.5% decline in traffic, while store conversions decreased 4.9% as its earlier pricing and marketing strategy weighed upon the results.
The pros and cons exhibited in the stock fairly support our unbiased view on the stock.
Other Stocks to Consider
Until any further upward revision in J. C. Penney’s Zacks Rank, the other stock in the Retail/Wholesale sector worth considering includes Citi Trends, Inc. (CTRN - Analyst Report) which holds a Zacks Ranks #1 (Strong Buy). ANN INC (ANN - Snapshot Report) and Christopher & Banks Corporation (CBK - Snapshot Report), both of which carry a Zacks Rank #2 (Buy) are also worth considering.