Is This Retailer Showing Signs of Desperation?

Focus: STOCKS

The retail sector has been grinding through tough times for a while now, but this legendary mid-tier retailer, once on the comeback trail, may have lost its way, warns Chad Fraser of Investing Daily.

JCPenney (JCP) CEO Ron Johnson showed more signs of deviating from his ironclad policy of eliminating discount sales, after the company announced that it will offer deep price cuts on certain items as part of this year’s Black Friday kickoff to the holiday season.

The move came after the company recently e-mailed customers a $10 “gift” to use when they make a purchase at one of its newly redesigned stores. That’s a coupon by any other name, though JCPenney denies this.

“This invitation is in no way a reflection of a departure from our fair and square everyday low prices,” JCPenney spokesperson Kate Coultas told The Wall Street Journal.

Its Fourth Consecutive Losing Quarter
Either way, it’s unlikely that the timing of these announcements—bookending the release of more disappointing earnings from JCPenney—is a coincidence.

In the company’s third quarter, which ended October 27, its sales fell 26.6% to $2.93 billion, from $3.99 billion a year ago. That was well short of the consensus forecast of $3.27 billion. Same-store sales fell 26.1%, and online sales dropped 37.3%.

On an adjusted basis (excluding gains on sales of non-core assets, restructuring charges and a non-cash pension plan expense), J.C. Penney lost $203 million, or 93 cents a share, compared to a profit of $38 million, or 18 cents a share.

 
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