Penney shares slammed as holiday quarter sales disappoint
By Phil Wahba
(Reuters) - J.C. Penney Co Inc (JCP.N: Quote) shares fell 10 percent on Tuesday after the struggling retailer reported a disappointing rise in comparable sales for the holiday quarter, prompting fears its business is recovering too slowly.
Penney also did not provide details on its gross profit margin, leading Wall Street analysts to conclude the department store operator had to resort to bigger discounts during the holiday season.
Sterne Agee lowered its price target on Penney share to $3 from $9, while JP Morgan cuts its target price to $5 from $6.
Shares fell as much as 13.7 percent to $4.90, their lowest level in decades. They were trading at $5.11 in mid-afternoon trading.
Penney's comparable sales - those online and at stores open at least a year - rose 2 percent during the fiscal fourth quarter. That was less than the 4 percent analysts were expecting, according to Thomson Reuters I/B/E/S.
"The slope of the improvement needed to be much better to effect the kind of turnaround that JCPenney needs," said Sterne Agee analyst Charles Grom.
Still, Penney said it had $2 billion in liquidity available at the end of the quarter, in line with its earlier forecasts, easing concern about how much cash it was using up as it attempts to fix its business.
It was the retailer's first three-month period of growth in two years. But it also came a year after Penney reported a 31.7 percent quarterly decline, as the retailer's now-abandoned attempt to go up-market by ditching coupons and opening in-store boutiques for hip brands failed to catch on with shoppers. Continued...