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J. C. Penney's performance is unconvincing – the Motley Fool



If only Sears Holdings (NASDAQ: SHLD) would hurry and get out of business faster, maybe J.C. Penney (NYSE: JCP) would have a better chance of survival. JC Penney CEO Marvin Ellison, who has just resigned to take over the top leadership position at Do-It-Yourself Lowe's told analysts during the first-quarter mid-floor conference call, "If we're a Sears nearby This is a significant advantage for our business. "

Of course, Penne's best-selling stores are also located in shopping malls with a Sears store. This is a mystery to the retailer, even if investors can not be. I am glad that JC Penney has apparently tied his refurbishment car to a failing rival.

  Woman receiving packages from J.C. Penney.

Supply Chain Problems Helped J.C. Lower Penney margins in Q1. Image Source: J.C. Penney

No Challenge

Considering how bad Sears was in the first quarter, you might think that J.C. Penney would have had to cut a lot better. Sears' customers continued to flock, with comparable store sales down at mid-range rates, but JC Penney was just 0.2% up at Comp, at the end of its forecast from flat to 2%. Growth. Even though JC Penney purposely tries to steal Sears customers by bringing devices into his stores and modifying his home department. Although it reportedly had 15% comps growth in devices, it is still only a small part of the retailer's business and could not nearly equal the declines elsewhere.

Women's clothing has long been JC Penney's money center, accounting for a quarter of total revenue, but lately it has not been possible to move goods. Even after most of the inventory was liquidated last year, the department store chain still had to make price reductions to address items that were not sold, which put margins under pressure. Management had said margins were likely to be lower in the first quarter, but the percentage decline was worse than expected.

I do not buy it

The retailer is making a part of the blame for the weather, but the cooler temperatures did not seem to work Macy (NYSE: M) which reported really robust results many of whom expected JC Penney to follow suit. Although Macy's said that some markets were affected, they were offset by others that were not. The weather should pull Penney off if it has more business than its rival – which should spread the influence more – that it is more of an excuse than a reason.

Because of this, JC Penney's problems with their online business are a concern. She faced a series of supply chain issues that prevented JC Penney from delivering products to customers in a timely manner. This was another pressure point on the margins.

Amazon.com is poised to outrun Macy's as the largest apparel retailer this year – JC Penney has been trying to better connect his digital business to his physical business and even make online orders to fulfill its business and to send. Stumbling over the fact that it makes an obvious fashion faux pas with clothing will only serve to drive customers further away.

The inversion that was not

But it was JC Penney's revised guide that was the most marketed concern. The department store said full-year earnings could range from $ 0.07 to $ 0.13 per share, a dramatic change from the previous $ 0.05 to $ 0.25 profit margin Share represents. While both areas are wide enough to drive a truck, it is clear that JC Penny's position is worsening while rivals like Macy's recovery are dwindling.

By measuring his performance against Sears, the retailer takes the approach that it does not matter so much, but his rival fails. However, even after Sears reported his own gritty earnings, J.C. Penney still could not win. Instead of being in the middle of another recovery, it may be preparing for a second trip to the Edge.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Rich Duprey has no position in any of these stocks. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.


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