J.C. Penney (JCP) Down Heavily After Earnings

Posted by jbrumley on November 13, 2015 11:52 AM

J.C. Penney (JCP) Shares Remains Stuck in Rut Despite Clear Sales, Earnings Progress

Retailer J.C. Penney (JCP) fared measurably better than expected last quarter, in terms of earnings as well as sales. But, the company's unwillingness to raise its same-store sales-growth forecast for the full year torpedoed the stock.

In its third fiscal quarter of 2015, J.C. Penney posted a loss of 47 cents per share on revenue of $2.9 billion. Both were better than the comparable figures from a year earlier, when the company reported a loss of 62 cents per share on $2.76 billion in revenue. And, both were better than the figures analysts were calling for. The pros had predicted J.C. Penney would post a loss of 55 cents per share on sales of $2.86 billion.

Same-store sales were up an impressive 6.4%, topping estimates for a 5.7% improvement. The company, however, maintained that same-store sales for all of 2015 would only grow between 4% and 5%, as had been previously suggested. That muted growth outlook in the shadow of Q3's same-store sales growth of 6.4%, Q2's same-store sales growth of 4.1% and Q1's same-store sales growth of 3.4% implies that the sales-growth acceleration J.C. Penney has mustered as part of a mostly-successful turnaround effort this year is poised to decelerate during the current quarter. 

While it may be a low-ball figure being put in place to ensure the retailer doesn't disappoint when it reports its Q4 and full-year figures next year,  investors aren't taking any chances. JCP shares are down over 10% on Friday after the earnings news was reported, shattering what looked like a budding rebound effort, and pulling JCP shares below their 200-day moving average line. Still, that sharp dip leaves the stock well above the lower edge of the converging wedge shape that's kept shares from making any net progress (up or down) since late-2013.

JCP Weekly Chart