If it does, CEO Mike Ullman and his team will gain a good bit of support in the investment community.
Department stores reported disappointing earnings during the first quarter thanks to bad weather. According to data compiled by Bloomberg, four of six department stores with a $2 billion market cap or greater met lowered Wall Street earnings expectations -- only Sears (SHLD) and Kohl’s (KSS) fell shy. On average, first-quarter gross profit margins for the sector declined 40 basis points year over year, as compiled by Bloomberg. Even Macy’s (M), long viewed as the industry's best operator, notched a 1.6% same-store sales decline in the quarter, though it reaffirmed its fiscal year earnings per share guidance of $4.40 to $4.50.
Then there was J.C. Penney, which my firm Belus Capital Advisors upgraded to hold from sell on April 10. Opposite to its competitors, J.C. Penney had the advantage of cycling steep sales and profit drops a year earlier (which makes current performance look better) as Ullman began to implement merchandising and marketing strategies to reverse the ill effects of ousted CEO Ron Johnson. This time around, helped by a strong Easter selling season in April, healthier stock levels and more effective marketing, J.C. Penney delivered a first quarter that led investors to buy into the notion the business was on a sustainable turnaround path.