The Impact of JCPenney’s Fiscal 1Q17 Results on JCP Stock



JCP’s stock reaction to its fiscal 1Q17 results

JCPenney (JCP) stock fell 14% on May 12 in reaction to the company’s fiscal 1Q17 results. JCPenney’s sales fell in fiscal 1Q17 despite the company’s turnaround efforts. The company’s stock declined 7.4% on May 11, when department store peers Macy’s (M) and Kohl’s (KSS) reported lower sales for fiscal 1Q17.

The decline continued on May 15 when JCPenney’s stock fell another 4.6% as analysts at Baird, Deutsche Bank, and Buckingham Research all downgraded the stock.

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YTD price change

Overall, as of May 15, JCP stock has fallen 47.8% on a YTD (year-to-date) basis. Meanwhile, the stock prices of Macy’s, Nordstrom (JWN), and Kohl’s have fallen 35.2%, 13.6%, and 25.1%, respectively, YTD as of May 15.

Notably, JCPenney and its department store peers have underperformed the S&P 500 Consumer Discretionary Index (XLY) and the S&P 500 Index. As of May 15, the S&P 500 Consumer Discretionary Index and the S&P 500 Index have risen 10.4% and 7.3%, respectively.

Persistent weakness

Department stores are experiencing persistent weakness in their top lines, with more and more consumers opting for digital shopping, which has been benefitting online retailers like Amazon.com (AMZN). Off-price retailers like TJX Companies (TJX) and Ross Stores are further intensifying the competition by selling their merchandise at deep discounts compared to similar merchandise sold by department stores.

In this series on JCPenney’s 1Q17 results, we’ll discuss the company’s sales, its margins, and the impact of its results on its valuation. Continue to the next part for a look at the latest analysts’ recommendations.


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