J.C. Penney Holiday Comps Fall, Store Closures In The Cards

J. C. Penney Company, Inc.’s (NYSE:JCP) comparable store sales for the nine-week period ended Jan 5, 2019 dipped 3.5% on a shifted basis. The metric declined 5.4% on an unshifted basis. Analysts stated that stiff competition from e-commerce players and struggle to cope up with rapidly changing trends might have hurt the retailer’s performance.

Industry experts cited a sluggish holiday season as one of the reasons behind the stock’s bearish run on the bourses. This Zacks Rank #3 (Hold) stock has lost 11% in the past month, against the industry’s growth of 0.6%.

Apart from this, the company has retained its free cash flow guidance for fiscal 2018. J. C. Penney continues to anticipate inventory reduction of 8% and also projects liquidity in excess of $2 billion by the end of the fiscal year. This might bring a sigh of relief for the company as it is grappling with high level of inventory, which, in turn, is hurting its profitability. In this regard, management plans to right size inventory levels and shut down stores to help the company focus on core brands and categories that fetch profitable sales. J. C. Penney plans to shut down three stores this spring as part of its evaluation program.

Further, the company is also undertaking initiatives to boost sales with special size offerings. In this regard, J. C. Penney unveiled Shaquille O`Neal XLG brand, especially designed for big & tall customers. The company also launched fashion tween brand, Obsess, and redesigned Okie Dokie children’s private brand. Also, it has collaborated with Fanatics, Inc. to launch Fanatics shops to attract sports fans with the newest and popular team apparel inside their local J. C. Penney store. The company’s in-store Sephora departments continue to outperform by drawing more customers.

Additionally, with the appointment of Jill Soltau as its new CEO, the company has undertaken initiatives such as brand makeover, enhancement of omni-channel capabilities and strategic partnerships as part of its turnaround efforts.

All said, we hope that such initiatives will help the company focus on its core business growth and get back on track soon.

3 Retail Stocks to Bank On

Crocs, Inc. (NASDAQ:CROX) has long-term earnings growth rate of 15% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

G-III Apparel Group, LTD (NASDAQ:GIII) has long-term earnings growth rate of 15% and a Zacks Rank #1.

Macy’s (NYSE:M) has long-term earnings growth rate of 8.5% and a Zacks Rank #2 (Buy).

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