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J. C. Penny, Synchrony Extend Alliance With Multi-Year Deal
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Shares of J. C. Penny Company, Inc. soared 6.6% on Oct 10, following a multi-year deal to extend its partnership with Synchrony aimed at boosting customers’ shopping experience. Both the companies have been associated for the past two decades to provide customers with J. C. Penney Mastercard Dual Card and private-label credit card program. This collaboration has already been a success with J. C. Penney’s customers benefiting from all shopping channels.
In doing this, the companies use data analytics along with their consumer financial services expertise. Also, Synchrony assists J. C. Penney in integrating credit payments into the latter’s mobile app via SyPi, a Synchrony plug-in.
Moving on, J. C. Penney’s payment cards will continue to be managed and serviced by Synchrony at the former’s online store as well as more than 860 stores in the United States and Puerto Rico. The company’s credit card is significant part of its loyalty program that enables customers to save more and get enticing benefits. The cardholders are entitled to J. C. Penney Rewards, through which they will earn points two times faster and receive a $10-reward for future purchases. The company rallies high on its credit card holders who shop frequently and spend 2.5 times more than other customers.
However, this Zacks Rank #5 (Strong Sell) company faces headwinds from soft margin. The company witnessed gross margin contraction of 160 basis points (bps) in the second quarter, following contraction of 240 bps in the preceding quarter. While gross margin for the quarter is likely to remain under pressure in the third quarter, cost of goods sold as a percentage of net sales is anticipated to increase year over year, owing to management’s efforts to right size inventory levels. Management plans to lower enterprise inventory by at least $250 million by the end of fiscal 2019. This may hurt gross margin for the next few quarters.
Additionally, muted fiscal 2018 guidance is also a matter of concern. Management now expects adjusted earnings to range from a loss of 7 cents to earnings of 13 cents a share. Comparable sales are projected to be almost flat for the full year compared with the prior guidance of flat to up 2%.
We note that shares of J. C. Penney plunged 27% in the past three months, underperforming the industry’s decline of 5.4%.
Looking for More Promising Retail Stocks? Check These
Urban Outfitters (URBN - Free Report) has a long-term earnings growth rate of 12.8% and a Zacks Rank #1.
Kohl’s Corporation (KSS - Free Report) has a long-term earnings growth rate of 6.7% and a Zacks Rank #2 (Buy).
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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J. C. Penny, Synchrony Extend Alliance With Multi-Year Deal
Shares of J. C. Penny Company, Inc. soared 6.6% on Oct 10, following a multi-year deal to extend its partnership with Synchrony aimed at boosting customers’ shopping experience. Both the companies have been associated for the past two decades to provide customers with J. C. Penney Mastercard Dual Card and private-label credit card program. This collaboration has already been a success with J. C. Penney’s customers benefiting from all shopping channels.
In doing this, the companies use data analytics along with their consumer financial services expertise. Also, Synchrony assists J. C. Penney in integrating credit payments into the latter’s mobile app via SyPi, a Synchrony plug-in.
Moving on, J. C. Penney’s payment cards will continue to be managed and serviced by Synchrony at the former’s online store as well as more than 860 stores in the United States and Puerto Rico. The company’s credit card is significant part of its loyalty program that enables customers to save more and get enticing benefits. The cardholders are entitled to J. C. Penney Rewards, through which they will earn points two times faster and receive a $10-reward for future purchases. The company rallies high on its credit card holders who shop frequently and spend 2.5 times more than other customers.
However, this Zacks Rank #5 (Strong Sell) company faces headwinds from soft margin. The company witnessed gross margin contraction of 160 basis points (bps) in the second quarter, following contraction of 240 bps in the preceding quarter. While gross margin for the quarter is likely to remain under pressure in the third quarter, cost of goods sold as a percentage of net sales is anticipated to increase year over year, owing to management’s efforts to right size inventory levels. Management plans to lower enterprise inventory by at least $250 million by the end of fiscal 2019. This may hurt gross margin for the next few quarters.
Additionally, muted fiscal 2018 guidance is also a matter of concern. Management now expects adjusted earnings to range from a loss of 7 cents to earnings of 13 cents a share. Comparable sales are projected to be almost flat for the full year compared with the prior guidance of flat to up 2%.
We note that shares of J. C. Penney plunged 27% in the past three months, underperforming the industry’s decline of 5.4%.
Looking for More Promising Retail Stocks? Check These
Boot Barn Holdings (BOOT - Free Report) has a long-term earnings growth rate of 25.3% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Urban Outfitters (URBN - Free Report) has a long-term earnings growth rate of 12.8% and a Zacks Rank #1.
Kohl’s Corporation (KSS - Free Report) has a long-term earnings growth rate of 6.7% and a Zacks Rank #2 (Buy).
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>