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J. C. Penney Company, Inc.

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Shares of J. C. Penney have underperformed the industry in the past three months. We note that the company reported an adjusted loss and year-over-year decline in the top line during the third-quarter fiscal 2018. Apart from this, soft fiscal 2018 guidance also led to the stock’s debacle. Gross margin contraction, owing to liquidation of slow moving and old inventory, also add to the woes. Going ahead into fourth quarter, the company expects margins to decline further. Moreover, the company witnessed soft comps in the quarter which is likely to decline further in fiscal 2018. Further, in an effort to lure customers and ramp up sales, management has enhanced the existing loyalty program. These along with focus on enhancing the reach of national and private-label brands, store remodeling and refurbishment, merchandise initiatives, omni-channel endeavors, and favorable pricing actions bode well.

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