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JCPenney (JCP) Could Take Another Hit on Huge Martha Stewart Inventory Pile

April 8, 2013 8:23 AM EDT
JCPenney's (NYSE: JCP) worries are far from over.

According to the NY Post on Monday, the tussle over an agreement with Martha Stewart Omnimedia (NYSE: MSO) has JCPenney up in arms...and preparing for the worst. Sources said that JCPenney is scrambling to procure non-Martha Stewart home goods from Asian suppliers should the court battle with Macy's (NYSE: M) come to an unfavorable verdict. The Post said that those supplies could take 75 to 90 days to ship over.

JCPenney might end up with loads of unsold Martha Stewart inventory which has already been produced. That will add much more pressure for the retailer to boost its dwindling cash pile.

The generics would likely be sold under JCPenney's old 'Penney' private labels, which include JCP for bedding and Cook's for kitchenware, the Post said.

Since CEO Ron Johnson took over in early 2012, JCPenney has see its share price plummet over 60 percent while sales in the most recent quarter fell over 30 percent. Some analysts have recently expressed lack of confidence that the retailer will be able to make up the billions in lost sales seen from implementation of its new pricing scheme.

Even JCPenney's largest shareholder, Bill Ackman of Pershing Square, recently criticized the way things were being handled at the company, despite Ackman hand-picking Johnson himself. Ackman last reported holding 39.08 million JCPenney shares, or about 17.8 percent of all outstanding stock.

Value of JCPenney's Martha Stewart inventory wasn't disclosed.

JCPenney is indicated higher Monday morning.


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