At Least J.C. Penney Has a Great Personality

When you have nothing nice to say, give vague glowing praise that doesn't answer the question at hand.

  • How does she look? She has a nice personality.
  • Would you recommend this former employee? He was punctual.
  • How did the holiday-shopping season go, J.C. Penney (NYSE: JCP  ) ? The company is pleased with its performance for the holiday period, showing continued progress in its turnaround efforts.

In short, J.C. Penney has a nice personality -- and it's punctual -- because it's not much to look at and it's not getting the job done.

The struggling department-store chain didn't have a problem bragging about posting positive comps in October for the first time since 2011. It had no problem getting specific when boasting about its 10.1% spike in same-store sales in November. But merely sticking to earlier guidance and voicing pleasure in its turnaround efforts isn't enough.

Growing after posting a horrendous holiday quarter a year earlier was never going to be a major achievement. Comps plunged 31.7% during last year's seasonally relevant period. We never got the monthly breakdown for how November, December, and January went, but it should have been clear that a mere 10.1% increase in November wasn't going to be enough to call this a turnaround. Even then it's not as if J.C. Penney was a lot of help. Comps don't take us beneath the surface to what could very well be squeezed margins on clearance sales. We saw promotional pricing play a major role in October's uptick, and it probably wasn't encouraging to see the merchandise inventory balloon from $3.36 billion to $3.75 billion in the 12-month period through the end of October.

Something's just not right at J.C. Penney, and not just because analysts see another quarterly loss during a reporting period that will find most of its peers soaking in profitability. 

"The market may be cheering the double-digit uptick in comps, but it's an incomplete story," I wrote last month. "Save your applause for when J.C. Penney has actually earned it."

Well, it still hasn't earned the applause. By reiterating its outlook for the quarter that ends this month, J.C. Penney is saying that it still sees positive comps for the entire quarter. But after kicking things off with a 10.1% surge in November, it's not much of a guarantee that December and January will be acceptable. 

Given the market's reaction to its incomplete holiday update, it's safe to say that what "pleases" J.C. Penney is not pleasing investors.

Shop for a real winner in retail
To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2787993, ~/Articles/ArticleHandler.aspx, 8/29/2014 10:10:03 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement