J. C. Penney Company (JCP) posted a second-quarter 2012 loss of $0.37 per share that fared worse than the earnings of $0.19 in the year-ago quarter and the Zacks Consensus Estimate of loss of $0.24. Following disappointing quarterly results, the company hinted that it will not achieve its earlier guidance of $2.16 per share for fiscal 2012. Total revenue also fell 22.6%, whereas comp sales slid 21.7%.
We observe that despite a well-diversified supplier base, the company has been struggling against other retail chains. In order to uplift itself and to become America's favorite store, J. C. Penney announced slew of measures, which include new pricing strategy, fresh logo, strategic merchandise initiatives, cost reduction and enhancement of customers shopping experience.
However, the dismal results dashed those hopes at least for the near term. Moreover, an erratic consumer behavior and a sluggish economic recovery still remain matters of concern. Consequently, we downgrade our recommendation on the stock to Underperform.