Why J.C. Penney Company, Inc. Stock Soared

Why J.C. Penney Company, Inc. Stock Soared
Source: jcp.com/ jcpnewsroom.com

J.C. Penney Company, Inc. (NYSE:JCP) reported a smaller than expected loss, sending the stock higher by over 15% in early trading.

Lower than anticipated loss

The mass-market retailer reported a loss of $0.68 per share on $3.78 billion in revenue.  Wall Street had projected $0.85 loss per share on slightly higher revenue, expected at $3.85 billion.  A note of concern in the earnings statement was a one-time tax benefit as well as the gain from the sale of assets.

Sears Holdings, a direct competitor of J.C. Penney Company, Inc. (NYSE:JCP), is having difficulty attracting customers and is also reporting losses, showing a trend in the sector.

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J.C. Penney Company, Inc. (NYSE:JCP) reported an operating loss of $1.42 billion, including $215 million of restructuring and management transition charges.  Same-store sales are up 2%, which is the first time sales rose since 2011. The retailer is optimistic going forward, forecasting an additional 3% to 5% rise in sales during Q1 2014.

J.C. Penney CEO maintains positive outlook

“J.C. Penney Company, Inc. (NYSE:JCP) achieved what it set out to do on a number of important fronts in 2013. We stabilized our business, both financially and operationally, and restored our process disciplines, promotions, inventory levels and focus on the customer,” said Chief Executive Officer Myron E. Ullman III in an earnings release. “As a result, we generated positive comparable store sales in the fourth quarter and ended the year with more than $2 billion in total available liquidity. These important accomplishments reflect the progress we have made in our turnaround, which remains on course heading into 2014.”

While the stock is higher on the day, J.C. Penney Company, Inc. (NYSE:JCP) stock dove nearly 75% after hitting its 52-week high of $21.76 per share on Feb. 25, 2013.  Yesterday it ended the day at $5.96 per share, and today it is trading above $7 per share.

“With the most challenging and expensive parts of the turnaround behind us, we will focus on improving gross margin, managing expense and steadily growing our sales in 2014,” Ullman said. “The goal is to deliver consistently improving financial results, and to restore J.C. Penney Company, Inc. (NYSE:JCP) as a leader in American retail.”

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com

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