J C Penney Company Inc (JCP) Earnings Send Stock to All-Time Low
J C Penney Company Inc (ticker: JCP) shares plunged, falling as much as 25 percent on Thursday, with shares now down 34 percent in the past year following another disappointing quarter from the brick-and-mortar retailer. J.C. Penney also once again lowered its full-year guidance, and analysts say investors shouldn't expect things to get easier from here.
On Thursday morning, JCP reported a second-quarter adjusted earnings per share loss of 38 cents on revenue of $2.76 billion. Both numbers fell short of consensus analyst estimates of a 6-cent loss on $2.86 billion in revenue. Revenue was down 7.5 percent from a year ago.
[See: 7 Stocks That Soar in a Recession.]
In addition, same-store sales growth was just 0.3 percent, missing analysts' average estimate of 1 percent. The same-store sales miss is particularly disappointing for JCP stock owners because of the company's aggressive cost-cutting initiatives and store closures in recent quarters. After closing nearly 140 stores in 2017, J.C. Penney said earlier this year it would close eight more in 2018.
In a statement, CFO Jeffrey Davis tried to put a positive spin on a difficult quarter.
"During the second quarter, we delivered a positive sales comp of 0.3 percent. We had a strong start and finish to the quarter, with both May and July comps delivering ahead of our annual comp guidance range," Davis says.
Former J.C. Penney CEO Marvin Ellison left the company in May to take over as CEO of Lowe's Companies ( LOW). J.C. Penney said on Thursday that hiring a new CEO is its top priority and the board has already met with several candidates.
Looking ahead, J.C. Penney lowered its full-year EPS loss guidance from a previous range of between 7 cents and 13 cents to a new range of between 80 cents and $1.
J.C. Penney stock dropped below $2 for the first time in its 89-year history on the New York Stock Exchange on Thursday morning as investors consider whether a comeback is plausible for the retailer.
Cowen & Co. analyst Oliver Chen says J.C. Penney will have a difficult time filling Ellison's shoes.
"We believe Marvin Ellison's strengths in appliance execution and leadership skills will be difficult to replicate," Chen says.
[See: 9 Best Cheap Stocks to Buy Now Under $5.]
Cowen has a "market perform" rating and $3 price target for JCP stock.
Wayne Duggan is a freelance investment strategy reporter with a focus on energy and emerging market stocks. He has a degree in brain and cognitive sciences from the Massachusetts Institute of Technology and specializes in the psychological challenges of investing. He is a senior financial market reporter for Benzinga and has contributed financial market analysis to Motley Fool, Seeking Alpha and InvestorPlace. He is also the author of the book "Beating Wall Street With Common Sense," which focuses on the practical strategies he has used to outperform the stock market. You can follow him on Twitter @DugganSense, check out his latest content at tradingcommonsense.com or email him at wpd@tradingcommonsense.com.
