Stock movement before results

JCPenney (JCP) stock was down 57.6% YTD (year-to-date) on November 9. The significant fall in the company’s stock price was the result of its dismal performance in recent quarters and the departure of key executives.

JCPenney is scheduled to announce its earnings results for the third quarter of fiscal 2018 on November 15. Analysts expect the company’s revenue to be flat YoY (year-over-year) and its adjusted EPS to fall further in the quarter, which ended on November 3.

Will JCPenney’s Q3 Results Bring Investors Some Hope?

In contrast to JCPenney, the stocks of peers Kohl’s (KSS), Macy’s (M), and Nordstrom (JWN) have risen 51.2%, 50.0%, and 38.2%, respectively, YTD (year-to-date).

Analysts’ ratings

On November 9, JCPenney was rated as a “hold” by 12 out of 16 analysts (or 75%) covering the mid-tier department store chain. The stock has “sell” recommendations from four analysts. JCPenney’s revenue fell in the first two quarters of fiscal 2018. The convenient shopping experience online retailers provide and the attractive deals off-price retailers offer have made the retail environment very competitive for JCPenney and other department stores.

From focusing on categories beyond apparel, such as beauty and home, to strengthening its digital channels, JCPenney has been taking several measures to boost its sales. However, a challenging retail landscape continues to drag down the company’s performance.

JCPenney appointed Jill Soltau as its CEO in October. She replaced Marvin Ellison, who had resigned to assume the position of CEO of home improvement retailer Lowe’s (LOW). Soltau’s three-decade experience in the retail sector, most recently as president and CEO of Jo-Ann Stores, is expected to benefit JCPenney.

On October 29, JCPenney announced that Michael Fung was temporarily joining as the company’s interim CFO, succeeding Jerry Murray, who would continue as senior vice president of finance. Fung has rich financial experience in companies such as Neiman Marcus Group, 99 Cents Only Stores, and Walmart.

JCPenney’s newly appointed executives have a tough task of bringing the department store chain back onto the growth track. We’ll discuss expectations for JCPenney’s revenue in the next article.

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