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Bear of the Day: J.C. Penney (JCP)

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J.C. Penney Company, Inc. has lost all the momentum it built for its turnaround over the last several years. This Zacks Rank #5 (Strong Sell) is once again seeing declining earnings.

J.C. Penney is an apparel and home retailer with over 860 stores in the United States and Puerto Rico.

It also sells online at jcp.com.

A Big Miss in the Second Quarter

After putting together a string of beats and meets, J.C. Penney finally came apart, missing the Zacks Consensus Estimate by a whopping 30 cents. Earnings were a loss of $0.38 versus the Consensus of a loss of just $0.08.

Comparable store sales managed to finish in the green, rising 0.3%. The top performing categories were Children's, Jewelry, Sephora, Women's Apparel and Salon.

Lowered Full Year Guidance

Despite some positive categories, and a strong May and July in the second quarter, the company lowered its full year targets.

Comparables are now expected to be flat with earnings now seen as a loss of $1.00 to a loss of $0.80.

The analysts reacted by cutting their estimates sharply.

The Zacks Consensus Estimate went from earnings of $0.02 to a loss of $0.71 since the report. That's a decline in earnings of 422% as the company made $0.22 in 2017.

Earnings are still expected to be challenged in fiscal 2019 as well, with the Zacks Consensus looking for a loss of $0.20.

Shares Plunge

J.C. Penney was already lagging the rest of the retail industry going into the earnings report and the disappointing report just sealed their fate.

Shares are down 51% year-to-date and are now at new multi-year lows.



I know what you're thinking. You see that shares are under $2 and you think: is this a buying opportunity for value investors?

I was once a fan of J.C. Penney a few years ago. I thought it could turn it around. But the CEO left a few months ago and the Board hasn't picked a replacement.

How does a company recover from the darkness if it has no leader to get them there?

There's too much risk. A second turnaround plan doesn't even exist yet.

If you really want to own one of the department store stocks, buy one that is seeing rising earnings estimates like Macy's (M - Free Report) or Nordstrom (JWN - Free Report) .

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