This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

J.C. Penney: 'Less Bad' Ain't Good Enough

NEW YORK (TheStreet) -- Are investors looking at J.C. Penney (JCP - Get Report) through rose-colored glasses?

They must be because shares were up strongly in post-market trading Wednesday after the retailer's fourth-quarter earnings announcement, and they are rallying Thursday, up nearly 20%. The market liked what it saw in the company's lower-than-expected loss for the quarter and does not seem concerned revenue was slightly worse than expected. (The bottom-line figure includes a $270 million income tax benefit, which in my view should not be included.)

It is true that gross margins improved to 28.4%, 460 basis points better than the 23.8% reported for the same quarter last year. Same-store sales were up 2%, while online sales grew 26.3%. The company also generated positive free-cash for the quarter, to the tune of $246 million, by my calculation.

Investors looking for something, anything, in terms of signs of life from the company were happy. Could it have been worse? Certainly. However, the bar has been set so low for J.C. Penney that just finding a pulse is considered a step in the right direction.

The fourth quarter is make or break for retailers, when the bulk of revenue -- and in many cases profits -- are generated during the fiscal year. For J.C. Penney, it was much closer to break-even this year than last year.

A small sign of hope? Yes, but nothing to get overly excited about. Turn a profit, not one that is subsidized via a tax benefit, and then perhaps we can start talking about J.C. Penney's turnaround.

In terms of same store-sales, they dropped 32% for last year's fourth quarter, a horrific figure, and one that set the bar exceedingly low for this year. Same-store sales growth of 2%, coming off a -32% year, again, is nothing to be excited about.

It shows things are "less bad" for the retailer, but that's not good enough at this point.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
SYM TRADE IT LAST %CHG
JCP $8.25 5.40%
AAPL $125.13 -0.98%
FB $83.36 0.20%
GOOG $554.15 0.38%
TSLA $191.78 0.63%

Markets

DOW 17,890.50 -85.81 -0.48%
S&P 500 2,079.18 -7.06 -0.34%
NASDAQ 4,928.8250 -18.6160 -0.38%

Partners Compare Online Brokers

Free Reports

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