This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why J.C. Penney is Down (Update 1)

This story has been updated from 12:10 pm EST with stock price change.

NEW YORK (TheStreet) - J.C. Penney (JCP) shares plummeted 10.6% to $5.08 on Tuesday after it reported comparable sales for the fourth-quarter rose 2%. This is the first time since the second-quarter of 2011 that the struggling department store chain generated a positive quarterly sales result, but apparently the growth was not enough to impress investors.

The Plano, Texas-based company said for the nine-week November and December period, comparable store sales rose 3.1% over the same period last year. Sales via jcp.com jumped approximately 26.3%.

J.C. Penney closed its 2013 fiscal year with total available liquidity in excess of $2 billion.

"While 2013 brought a lot of change and challenges to JCPenney, the steady improvements in our business show that the company's turnaround is on track. In spite of the significant headwinds facing all retailers this season, including unprecedented harsh weather conditions in many parts of the country, we delivered on our promise to generate positive comparable store sales growth in the fourth quarter," J.C. Penney's CEO Myron E. (Mike) Ullman, III said in a statement.

J.C. Penney reported "solid performance" in several categories including, beauty (Sephora), activewear, sweaters, outerwear, dresses, boots, men's clothing, luggage and housewares.

The news comes as the struggling retailer spooked investors last week when it reported simply that it was "pleased" with its holiday sales performance and that customers "responded well to the company's offerings this holiday shopping season, both in store and online." The company had reaffirmed its outlook for the fourth quarter of sequential and year-over-year improvement of fourth-quarter sales comps and in gross margin.

Despite positive sales comps, J.C. Penney isn't expected to post a profit for the quarter. Analysts, according to Thomson Reuters, expect a loss of 76 cents a share on revenue of $3.93 billion.

"
While posting a +2.0% comp in 4Q is a step in the right direction, the slope of the improvement continues to disappoint," Sterne Agee analyst Charles Grom wrote in a note. "Equally concerning, our math suggests comps were negative (say 1%) during the December period, which frankly is just unacceptable given the compare. Net, odds of another cash infusion just augmented meaningfully."

Grom rates shares "neutral." He now expects J.C. Penney to post a loss of $1.05 a share for the quarter and dropped his price target to $3 from $9.

"Importantly, unlike prior sales updates, management failed to provide any color on traffic, conversion, or AUR," Grom wrote. J.C. Penney "needs the improvement to be much better than currently tracking and it is becoming increasingly critical that the company starts to see meaningful improvement if it is to survive as currently constituted."

J.C. Penney announced last month that it was closing 33 stores and eliminating 2,000 positions in order to focus on stores with "highest potential growth opportunities." The company will announce its full results for the fourth quarter on Feb. 26, after the market closes. "JCPenney's combination of relevant and giftable merchandise, outstanding customer service, and compelling promotions enabled our teams to drive sales in a difficult and competitive environment for retailers this holiday season," Ullman said. "As we look ahead to 2014, our associates are encouraged by the company's results and we remain steadfast in our focus to build on these achievements and return to profitable growth."

JCP ChartJCP data by YCharts

--Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,945.06 +25.47 0.15%
S&P 500 1,980.90 -0.70 -0.04%
NASDAQ 4,518.9370 -8.5770 -0.19%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs