If Best Buy can rebound, why not J.C. Penney?
Despite another awful earnings report, Wall Street thinks it sees early successes in CEO Mike Ullman's turnaround plan.
CEO Myron "Mike" Ullman, who was brought in to clean up the mess left by his predecessor/successor Ron Johnson, said in the earnings press release, "We are encouraged by our early performance this Back to School season." The quarter's results, however, were pretty awful.
Penney posted a loss of $586 million, or $2.86 per share, in the most recent quarter versus a year-earlier loss of $147 million, or 67 cents per share. Excluding one-time items, the per-share loss was $2.16, worse than the $1.06 loss analysts had expected. The $2.66 billion sales figure also lagged analysts' forecast.
Shares of J.C. Penney, nontheless, traded up as Wall Street cheered what little progress the 111-year old retailer did make. The overall sales drop was 12%, far below the 23% tumble a year earlier. Same-store sales, a critical metric of store performance open at least a year, fell 11.9%, versus a 22% slide during the same time period in 2012.
Best Buy shares are on the move as well after the consumer electronics chain reported better-than-expected results as the cost-cutting undertaken by CEO Hubert Joly appeared to be working. Like Penney, Best Buy has also had plenty of backstage drama, including the ouster of a former CEO Brian Dunn for having an inappropriate relationship with a subordinate. Chairman Richard Schulze was forced to resign and failed to take the company private. He has since returned as chairman emeritus.
But if Best Buy can rebound, why not Penney?
Some Wall Street analysts said they saw reason to be optimistic. Macquarie Group's Liz Dunn told Bloomberg News that "it's not the disaster that some thought it would be." Analysts at Sterne Agee are encouraging clients saying to buy Penney's shares, arguing that they're too cheap to ignore considering the boardroom drama involving activist investor Bill Ackman has been resolved.
Ackman, who lost a fight over the company's leadership and subsequently resigned his director's seat, recently entered an agreement with J.C. Penney so that he can begin selling his massive stake. Other hedge fund tycoons are eager to snap up the shares. Billionaire George Soros reportedly is the retailer's second-largest holder behind Ackman, and hedge fund investor J. Kyle Bass has taken a position as well.
One thing's for sure about Penney: One quarter does not make a trend.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Speaking from personal experience... I had a JC Penny account that I opened in 1992, and periodically charged small items for 15 years, always leaving a zero balance, and my credit limit increased slowly with them, then the purchases got larger and more frequent as my daughter got older, again I always left a zero balance. Last year, I suddenly received a letter in the mail that my JC Penny account was closed due to inactivity (less than 6 months of inactivity). I can say this school season as my daughter entered high school they have missed out on ALL our clothing purchases this year, and I am guessing there are a whole lot just like myself who fell victim of the Ron Johnson fiasco. Funny, the JC Penny ads keep coming, and I keep telling my story.
Different types of Stores... Both have very few similar items but Penney's is a Clothing Store and Best Buy is an Electronics Store. So we can't say similar fruits.
I always loved JCP, however, when they did away with the catalogs, which gave me ideas how to put clothes together, I just forgot about them. I have been ordering from other catalog dealers. Please, please bring back the old catalogs and I know I would start ordering. I guess I just don't have any imagination.
I was ripped off by Best Buy on a new computer setup for my home ($3,000+). Due to a disability I could not set up the equipment myself so I paid them extra to do so. When there were problems I received no service & nothing but excuses for a year. When they finally said they would be able to help they wanted to put me on the schedule for the next month - after their warranty & their expensive service program expired. I called somewhere else & will never spend a dime Best Buy again. One of my adult daughters had a similar experience with them.
I don't see how you can compare a clothing store to one that sells electronics. One has been poor management and the other is just a big rip off outfit with no ethics!
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Car buyers are taking out bigger loans, but monthly payments are staying close to the levels they were last year.
- Should the US scrap the debt ceiling?
- Will new mortgage rules mean fewer lenders?
- Why GM, Chrysler are riding high
- Survey: Dashboard lights fail to send right message
- Can you opt out of Medicare?
- Student loan debt climbs for 5th year in a row
- Plans revived for 'floating city' of 50,000 people
- Homeowners insurance: Bountiful coverage for bad cooking
- 3 stocks for the 3-D printing revolution
[BRIEFING.COM] The major indices are looking to hold the line on the downside. They aren't at their lows for the day, but they are close.
Thus far, we have seen recurring support keep things from extending further which, in turn, has prompted some recurring buy-the-dip action. The net result is that it has been a pretty range-bound market for most of the session as neither buyers nor sellers are staking much of a claim in front of the November employment report ... More
More Market News
The American Family Association is asking shoppers to avoid the chain because the holiday isn't mentioned in advertising.