Stock of the Day
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J.C. Penney (JCP)
J.C. Penney Improves Outlook Despite Losses
On the back of Wal-Mart's (WMT: Charts, News, Offers) positive outlook yesterday, many investors have been hoping to see a turnaround in the retail sector. And although Wal-Mart tends to be an indicator for other retail stores, in any situation where you're looking at a trend, you still will have anomalies. So as various retailers announced earnings this week, investors were faced with both profits and losses. J.C. Penney was one retailer to announce its earnings this morning, and as is typical with any earnings report, the announcement contained both good news, and bad news, and so far investors have chosen to focus on just one of these aspects.
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| Stock Analysis |
J.C. Penney's earnings just barely managed to beat expectations. Analysts had been expecting a minor loss of 1 cent per share, and J.C. Penney just managed to break even, with a loss of only $1 million. This is quite a change from last year, where the company earned a profit of $117 million, or 52 cents per share. Revenue was even with expectations, falling from $4.28 billion to $3.94 billion. Same-store sales, an area where Wal-Mart unexpectedly struggled yesterday, were a stumbling block for J.C. Penney as well; same-store sales fell a surprising 9.5%. All of this has prompted investors to send shares of J.C. Penney down about 5% in early-morning trading.
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Although these numbers weren't particularly bright, there was a hidden gem of good news. J.C. Penney announced a significant increase in their annual profit outlook. The company had previously predicted a yearly profit of 50 to 65 cents per share. Today, however, the company has improved their outlook to a range of 75 to 90 cents per share. The company has been implementing many cost-cutting measures, and is optimistic that its hard work has paid off. Surprisingly, although the company has made changes to increase their profit, they have not shied away from ambitious projects, such as the opening of a store in Manhattan, and it appears that their risks have paid off. This trend of a decreasing profit but an increasing outlook has been seen widely across the retail sector in recent weeks, and if it continues much longer, maybe investors will start to believe the optimistic messages of the retail executives.
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Retail Remarks:
Wal-Mart Still Faces Challenge Of Retaining Customers - Despite Wal-Mart's (WMT: Charts, News, Offers) positive outlook for the future, could an improvement in the economic situation actually hurt the company's performance?
Macy's Does Better than Expected, Lifts Guidance - Although Macy's (M: Charts, News, Offers)did better than expected, this individual is not able to ignore the 90% drop in profit, and just isn't confident about the company's future performance.
Kohl's tops expectations in the second quarter - Kohl's (KSS: Charts, News, Offers) clothing stores followed a similar pattern, but even the company's increase in sales and significant boost to its outlook couldn't help combat the uncertainty caused by its failure to meet expectations, and volatility is still expected ahead.
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More Stocks in the News:
Blockbuster May Be 'More Aggressive' Closing Stores -Blockbuster (BBI: Charts, News, Offers) announced the development of DVD rental kiosks, to compete with Coinstar's (CSTR: Charts, News, Offers) Redbox video kiosks. Blockbuster is working on implementing 10,000 kiosks, which should allow them to eliminate many of their unprofitable store locations.
Losing track of Boeing 787 Dreamliner's failures - Yesterday, Boeing (BA: Charts, News, Offers) announced yet another delay with the production of their 787 aircraft. The plane is already about two years behind schedule. How much longer will delays continue?
Republic Wins Bid for Frontier, Beating Southwest - Southwest Airline (LUV: Charts, News, Offers) fought hard to purchase Frontier Airlines, placing a $170 million bid, but ultimately the bid was rejected and Republic Airways won approval. Will Republic be able to handle this new responsibility?
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Profile |
Click here to view a detailed profile of J.C. Penney.
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