Watching bricks-and-mortar retail giants weaken by the day is like standing witness as a good friend's health declines. J.C. Penney Inc. (JCP) , in reporting earnings on Friday, Aug. 11, travels that sad path.

Of course, things could be worse.

Sears Holdings Inc.  (SHLD)  is at the top of that list, with mountains of debt, consistent losses and an evaporating cash position. 

Macy's Inc. (M)  has a place on that list, too, as a legacy retailer trying to secure its footing in an e-commerce age. All three, J.C. Penney, Sears and Macy's, have shuttered store after store, and Sears, in particular, appears to be on its last leg. 

Nonetheless, Plano, Texas based retailer J.C. Penney earned a reiterated hold rating, from Alex J. Fuhrman, senior research analyst, and Mark Rosenkranz, research analyst, at Craig-Hallum Capital Group, in a note published on Friday. But the analysts lowered their price target from $6 to $5, while the shares sank 15% to $3.99 in Friday morning's trading. 

Over the past year, shares of J.C. Penney have crashed 65%.

For the quarter ending July 29, J.C. Penney reported sales of $2.96 billion, up 1.5% from the year-ago period, with same-store sales down 1.3% year over year. Analysts surveyed by FactSet expected sales of $2.84 billion, with a same-store sales decline of 1.2%. However, J.C. Penney's adjusted net loss of 9 cents a share was well above the consensus estimates for a loss of 4 cents a share. 

A J.C. Penney store.
A J.C. Penney store.

"The shift in sales towards JCP's margin-eroding e-commerce channel is a perpetual drag on margins that is finally catching up with the company," wrote the analysts. "While the Q2 miss in gross margin was largely related to unanticipated performance of the liquidation of more than 100 stores, a significant 70 bps reduction to full-year gross margin guidance reflects a different reality; revenue is rapidly shifting online and gross margins will likely never again reach the 36% level achieved in 2015."

"While we are impressed with management's ability to reduce expenses," wrote the analysts, "we believe JCP's weak top-line growth and margin pressure is likely to continue in the foreseeable future, which will limit future upside to numbers once expenses have been maximally reduced, especially with the growth of JCP's e-commerce business continuing to limit gross margin gains."

Neither Sears nor J.C. Penney could immediately be reached for comment.

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