J.C. Penney Share Price Falls Wednesday, Rises Thursday
The market did, with JCP shares closing down more than 10 percent on the day Wednesday, closing at $7.37, off by $0.82.
In the statement, the company said it was “pleased with its performance for the holiday period,” but offered no sales figures or other metrics to explain why it was pleased. J.C. Penney did reaffirm its outlook for Q4, first mentioned in the company’s Q3 earnings release, November 20, 2013.
In December, the company also released a “Holiday Update” in which CEO Mike Ullman said, "We are pleased with our performance over the Thanksgiving holiday weekend, particularly in light of the continued spending pressures on consumers. The combination of our great merchandise and compelling promotions put us in a position to succeed in a highly competitive environment, and our teams executed very well."
That statement was backed up by notice that same store comparable sales were up 10.1 percent over last year during the Thanksgiving shopping period.
Sterne Agee retail analyst, Charles Grom reacted to the latest non-specific statement from J.C. Penney by saying, “If JCP had good things to say about business trends, the company would have shared more.”
Rick Snyder, analyst for Maxim Group LLC told Bloomberg, “What companies don’t say can be far more important than what they do say.” Snyder added, “This press release is remarkable for being unremarkable.” Snyder recommends holding shares of J.C. Penney.
The piling on by analysts continued. Referring to fears that the 10 percent gain in November was the top of the mountain for J.C. Penney and everything would be downhill from here on out, UBS AG analyst, Michael Binetti said in a note to clients, “Lack of any sales number in today’s release reinforces those fears.”
Binetti further pointed out that November was J.C. Penney’s best-case scenario for comp sales comparison since it measured results this year against a year ago when Hurricane Sandy cost retailers dearly. Binetti recommended clients sell their J.C. Penney shares.
Piper Jaffray, meanwhile, raised its rating on J.C. Penney from Neutral to Overweight Thursday, reiterating its $11 PT. Piper Jaffray said it believed the market overreacted to the company's holiday update and missed the point entirely.
According to Piper Jaffray analyst Neely Tamminga, "JCP is doing what they said they would do, and we believe any retailer reiterating their guidance following this compressed, promotional, mall-traffic-starved holiday season is a winner in our book."
J.C. Penney, whose shares were the second most actively traded NYSE-listed stock Wednesday, is expected to report fourth-quarter results in February.
At the time of this writing, Jim Probasco had no position in any mentioned securities.
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