Categories Analysis, Retail

Earnings preview: Market pins hope on new CEO for JC Penney’s turnaround

Shareholders of JC Penney (JPC) have waited for a long time looking for signs of improvement, but disappointment lingered as the stock continued its free fall and profitability remained under pressure. Large-scale store closures, amidst faltering footfall, and the resultant drag on comparable sales remain a challenge. Meanwhile, the management’s unimpressive outlook has thwarted hopes for a near-term turnaround.

JC Penney has remained a laggard in the highly-competitive retail sector, not adapting to the changing market conditions. It is imperative that the company take initiatives to ramp up its e-commerce platform and keep track of the changing customer preferences.

JC Penney has remained a laggard in the highly-competitive retail sector, not adapting to the changing market conditions

Last month, the market turned euphoric after industry veteran Jill Soltau took charge as the new CEO of JC Penney, to succeed Marvin Ellison. The company’s stock gained more than 10% soon after the announcement. The strategy envisioned by Soltau, who has a challenging task at hand, will be crucial for the retailer’s future.

Wall Street analysts expect that the Plano, Texas-based firm will remain in the negative territory when it announces earnings report for the third quarter Thursday before the opening bell. The consensus estimate is for a loss of $0.56 per share, which is sharply wider than the loss recorded a year earlier. Revenues are expected to remain flat at $2.83 billion.

Related links: JC Penney Q2 2018 Earnings Conference Call Transcript

At $2.76 billion, revenues were down 8% year-on-year in the second quarter when the department store continued its losing streak and posted a wider loss of $0.32 per share.

But, it’s too early to remove the company from the investment list, whose asset base remains intact and fundamentals pretty strong. The stock has attracted mixed ratings from analysts ahead of the earnings report, with many suggesting a buy.

J.C. Penney stock tanks over disappointing results, guidance cut

Among the other store operators, Kohl’s (KSS) is scheduled to report its third-quarter earnings on November 20 before the market opens. Macy’s will be announcing results for its most recent quarter Wednesday before the opening bell.

It’s been several years since JC Penney’s shares started their free fall. The stock, which reached the $81-peak more than a decade ago, is currently priced just above one dollar. It lost about 63% since the beginning of the year.


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