JC Penney's Return To Sales Growth Remains Unclear

Shares of J C Penney Company Inc JCP continued to slump Wednesday after reporting bigger losses than expected and projecting more losses for the rest of the year, keeping sell-side analysts bearish on its prospects, with one analyst even suggesting the shopping mall mainstay is a candidate for liquidation.

The Analysts

Tigress Financial’s Ivan Feinseth said in his daily newsletter he recommends “avoiding the shares at any price.”

Bank of America’s Lorraine Hutchinson reiterated an Underperform rating on the stock with a 90 cent price objective.

B Riley’s Jeff Van Sinderen lowered his price target from $1.40 to $1.30 while keeping a Neutral rating on the stock.

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JC Penney has “no unique value proposition and no unique shopping experience,” said Feinseth. “The competition is just too strong.”

JC Penney’s inability to grow sales is even more troubling given strong consumer sentiment, Feinseth said, adding that he believes the legacy retailer “most likely will announce a liquidation sometime this year.”

Feinseth said shares have “zero value” and “no investment opportunity.”

Company Also Cautious

There were likely several reasons JC Penney saw continued slumping sales, including bad weather and delayed tax returns, Hutchinson said. But there’s nothing that shows the company has any near-term of hope of a big turnaround.

And JC Penney acknowledged as much with the company’s new CEO Jill Soltau telling analysts on the conference call there are “no silver bullets” or other schemes for quickly righting the ship.

“We expect shares to remain pressured given the lack of visibility on a return to sales growth,” Hutchinson wrote in a note.

Van Sinderen did hold out some hope that Soltau’s efforts to overhaul the company’s management with “new merchandising talent” will be able to turn things around, though.

“We continue to believe that the new CEO is a considerable positive force on merchandising and improvement is achievable,” Van Sinderen wrote Wednesday. “We believe that Ms. Soltau understands the challenges in front of her.”

But, Van Sinderen said, “JCP remains an inherently difficult turnaround, particularly to sustain longer term.”

Price Action

JC Penney's stock was down another 5.61 percent Wednesday to $1.00 per share.

Photo courtesy of JC Penney.