JCPenney on Last Legs, According to Many Analysts

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Is JCPenney gasping its last breath?

Thursday’s poor earnings report solidified the belief that the traditional department store chain may be on its last legs. The company revealed an adjusted loss of $69 million in the first quarter of 2018 with sales dropping 4 percent. As bad as this report was, it was still even worse than Wall Street had been anticipating. The news sent JCPenney stock plummeting 10 percent early in the day’s trading. Now valued at less than $2.80 a share, the company now has a designation as a penny stock. On the heels of the report, the company revised its earnings forecast downward to just 13 cents per share, with most analysts believing it could fall much harder. Investors were looking for the company to hit a targeted profit of 19 cents.

The outlook is not pretty for the company, hit hard by the quickly growing shift toward e-commerce. With little cash in its coffers and mounting debt, Wall Street analysts are becoming increasingly concerned that there is no way out for the company. In 2017, JCPenney ended the year with $363 million on hand, however, a massive debt repayment now has the company left holding just $181 million in cash.

Like many retail companies this week that reported lower than anticipated earnings, JCPenney blamed part of the lackluster performance on bad weather conditions throughout much of the country this spring. However, on Wednesday, rival Macy’s surprised investors with better than expected earnings, not lending much cred to the poor weather excuse trotted out by JCPenney and others. CEO Marvin Ellison took the opportunity on Thursday to stress the positive aspects of the business, including a profitable partnership with beauty giant Sephora.

Earlier in 2018, JCPenney announced that it will be cutting at least 360 jobs spread out over its corporate headquarters and 860 retail storefronts.

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