Brian Sozzi Comments On JCPenney Following News Of 33 Store Closings, Employee Cuts

JC Penney JCP announced on Wednesday that in an effort to cut costs and return to profitability will slash 2000 jobs and close down 33 stores.

According to JCP's press release, the move should generate savings of $65 million.
JC Penney's CEO, Myron Ullman, defends the decision, “While it's always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position JCPenney for future success."

Belus CEO and Chief Equities Strategist, Brian Sozzi, released a report Thursday morning diving into the method behind JCP's madness, “JC Penney's rebirth is unfolding, but the huge issue is that it's moving extremely slowly, causing inefficiencies at the store that diminish the promotional and marketing initiatives being undertaken by management to rebuild customer relationships.”

Sozzi highlights the company's inability to liquidate furniture inventory despite markdowns and promotions. Sales are rebounding but at the expense of decreased margins due to a plague of post-holiday clearance sales. In the meantime, stock prices fluctuate wildly waiting for the company to rebuild its' foundation. The effort seems bleak as Sozzi reports that JC Penney's home department is under renovation leaving shelves empty across 500 stores, mitigating any potential catalyst heading into the new quarter.

“The way I would characterize JC Penney is a large, burning ship going full steam to reach dock before it sink,” says Sozzi.

JC Penney closed Wednesday at is currently $7.01 and currently trading down 5.5% at $6.62.