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J.C. Penney Maintains Guidance, Shares Fall

JCP M BONT KSS

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Recently, J. C. Penney Company, Inc. (JCP - Analyst Report) issued a press release declaring that sales during the holiday season were satisfactory. Moreover, the company reaffirmed its fourth-quarter fiscal 2013 guidance. Despite this, the stock price fell 10.0% to close at $7.37.

Market analysts believe that lack of sales data for the month of December, which includes the busy holiday season, has not gone down well with the investors. The company had provided favorable sales data for September, October and November. The company posted an increase of 0.9% and 10.1% in comparable store sales for October and November, respectively.

Notably, J. C. Penney’s reaffirmation of its fourth-quarter guidance also did not receive a favorable response. Earlier, during its third-quarter earnings announcement, the company had expected gross margin and comparable-store sales to improve year-over-year as well as sequentially during the fourth quarter of fiscal 2013.

J.C. Penney, which competes with Kohl's Corp. (KSS - Analyst Report), has been in troubled waters for quite some time. The situation particularly worsened after the failure of the then CEO Ron Johnson’s ambitious transformative ideas. Ever since, under its new CEO Myron Ullman, the company has been striving to reinstate the company on the growth trajectory.

We feel that the absence of sales data for December dampened the investor spirit. However, we believe that the company’s strategic efforts to turn around the company’s performance will take some time to materialize.

Macy's, Inc. (M - Analyst Report) came out strongly through the holiday season, which appeared to be a tough one. Comps for the November and December period combined rose 3.6%, while including departments licensed to third parties, it increased 4.3%. Shares of this department store operator climbed 5.3% or $2.75 to $54.59 during after-market trading hours.

Currently, J.C. Penney carries a Zacks Rank #3 (Hold). Some better-ranked retail stocks include Bon-Ton Stores Inc. (BONT) and Macy’s. While Bon-Ton carries a Zacks Rank #1 (Strong Buy), Macy’s has a Zacks Rank #2 (Buy).

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