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Canaccord Genuity Morning Coffee on J.C. Penney (JCP): Penney Pinched

July 11, 2012 10:24 AM EDT Send to a Friend
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Price: $10.80 -0.46%

Rating Summary:
    5 Buy, 16 Hold, 6 Sell

Rating Trend: = Flat

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    Up: 3 | Down: 4 | New: 7
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Canaccord Genuity Morning Coffee on J.C. Penney (NYSE: JCP): Penney pinched.

Shares of JC Penney slid after Credit Suisse published a report saying it believes that it is likely that JCP’s sales are trailing even the pace of first quarter’s disappointing results when reported sales were down nearly 20%. The brokerage believes a combination of poor messaging, tampering with the merchandise flow, and a slowing of the overall retail environment seem to have contributed to the current state of business. Credit Suisse believes this sales erosion makes a turnaround even more daunting as the second half approaches. JCP began the second quarter with what the brokerage believes is too much inventory, and in response, the company has slowed or outright canceled whatever orders it has been able to. However, at the same time, it appears JCP has slowed some clearance markdowns particularly in women’s ready-to-wear where few markdowns were taken in mid-June; while at Macy’s (NYSE: M), the brokerage notes that 65% off on multiple racks were evident. The result is that replenishment categories (such as basics) have been hard hit. Credit Suisse believes that many vendors are holding back on substantial commitments to JCP in 2013 and beyond, raising the specter that in order to accomplish the goal set out in January, more financial burden will fall to JCP as they will likely need to increase capital spending requirements in 2013 and 2014.




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Related Categories

Analyst Comments, Earnings, Retail Sales

Related Entities

Credit Suisse, Canaccord Genuity

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