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J.C. Penney's Comment-less Comments Leave Investors Speechless

By Nickey Friedman - Jan 13, 2014 at 12:14PM

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J.C. Penney continues to be a head-scratcher compared to rival retailers Macy's and Sears.

If J.C. Penney (JCPN.Q) is as clueless with its customer relations as it seems to be with its investor relations, then the company is in more trouble than you think.

On Jan. 8, in what seems like the world's shortest press release in history, J.C. Penney gave a headline that included the words "comments" and "holiday performance." The problem was that the press release itself gave no numbers about its performance and no direct comments from anybody at the company. It was possibly the most bizarre press release in company history and far from confidence-inspiring.

Analysis longer than the release
The barebones press release simply stated vaguely that the company is "pleased" with the holiday performance and that "customers responded well." If you want to try to translate in any further detail what that means, J.C. Penney said it reaffirms its previous outlook, referring you back to the Nov. 20, 2013, press release. Gee, thanks, J.C. Penney. Is it too much to remind us what those details are? Other than this reminder, your press release was literally one sentence long. I think you had the room.

Previous outlook
For the struggling retailer, perhaps the most important part of the outlook right now is sales, as without them the cost structure anywhere else won't matter. On Nov. 20, 2013, the company guided for the holiday quarter to show an improvement in same-store sales on both a sequential and year-over-year basis. That sounds OK, but the holiday quarter last year saw a 31.7% dive, so it's not exactly a tough comparison.

What's more is that in a previous release, CEO Mike Ullman already mentioned that November saw a 10.1% increase in same-store sales. In fact, in that release on Dec. 3, 2013, he had all sorts of positive things to say about J.C. Penney. He mentioned how the "teams executed very well" and how the "traffic and conversion ... was exciting for everyone across our organization." He concluded by saying, "We are all working to maintain our momentum through the Holiday season."

Now investors have waited with bated breath. How did the holiday season go? Perhaps the gains in November were temporary and things went bad in December. During the earnings conference call, J.C. Penney was shy about how November was going. Ullman even warned, "It's going to vary by week and by promotion. Also, the calendar is quite different than a year ago. But we're confident that we're on the right track and the customer is responding well."

Compare Penney to Macy's (M 6.48%) for an example of a competitor that communicates with investors properly. On Jan. 8, Macy's gave its holiday quarter update. Its holiday quarter saw same-store sales up 4.3% with November and December combined seeing a 3.6% rise. Chief Executive Officer Terry J. Lundgren had both positive details about company performance and negative details about the overall environment to share. Macy's announced an earnings date of Feb. 25 with its press release.

Meanwhile, Sears Holdings (SHLDQ) provided a quarterly update on Jan. 10. Same-store sales were certainly less than great, but at least Sears didn't keep it a secret like J.C. Penney did. Quarter-to-date same-store sales at domestic Sears dropped 9.2% and at Kmart fell 5.7%. Sears included many details, numbers, and real commentary. It expects to reports its earnings officially on Feb. 27.

Foolish final thoughts
Especially when it comes to a struggling turnaround hopeful such as J.C. Penney, Fools should always assume the worst in absence of factually reported progress. J.C. Penney has a history of underdelivering while overpromising. Given the company is already skating on thin ice, waiting on the sidelines for better tangible company progress is the safer way to go.

Fool contributor Nickey Friedman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

J. C. Penney Company, Inc. Stock Quote
J. C. Penney Company, Inc.
Macy's, Inc. Stock Quote
Macy's, Inc.
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Sears Holdings Corporation Stock Quote
Sears Holdings Corporation

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