In order to shield itself from hostile takeover attempts, J. C. Penney Company Inc. (JCP - Analyst Report) implemented a Stockholder Rights Plan, often referred to as “Poison Pill”, to fend off any effort to gain a controlling interest in the company by any person or a group of persons, which could be detrimental to the company or its shareholders.
We believe that the company remains susceptible to hostile takeovers as it has lost a substantial amount of market share in recent times. Shares have nosedived approximately 36.7% year to date, reflecting sinking revenues and bigger losses.
J. C. Penney’s restructuring initiatives have been crumbling as the company is exhibiting no signs of improvement. Alongside, it is constantly lagging its peers, Macy’s Inc. (M - Analyst Report) , Target Corporation (TGT - Analyst Report) and Kohl’s Corporation (KSS - Analyst Report) in terms of performance.
During the last reported quarter, J. C. Penney posted adjusted loss per share of $2.16, dashing all hopes of recovery, at least in the near term. The loss incurred was wider than the loss of 37 cents in the year-ago quarter. The Zacks Consensus Estimate for the quarter was a loss of $1.13.
The company’s quarterly sales of $2,663 million plunged 11.9% year over year and fell short of the Zacks Consensus Estimate of $2,746 million. Comparable store sales decreased 11.9% year over year as its earlier pricing and marketing strategy failed to lure customers.
By virtue of the Stockholder Rights Plan, J. C. Penney declared a dividend of one right for each outstanding share to the shareholders of record as on Sep 3, 2013. The company stated that the plan will be effective for one year.
Shares of J.C. Penney currently carry a Zacks Rank #3 (Hold) as we prefer to remain on the sidelines until we see near-term catalysts that could induce an improvement in the company’s performance.