With Everything Going Wrong at JCPenney (JCP), is Now the Time to Buy?

August 16, 2013 10:24 AM EDT
Despite reports earlier this week that comparable-store sales appear to be improving this month, is it time to jump back into JCPenney? The answer might actually be "yes."

JCPenney (NYSE: JCP) is slated to report Q213 results on August 20th. Analysts are looking for a drop in sales for the ninth-straight quarter, but most see the second-half of 2013 improving over the first six-months of the year.

For the recent quarter, JCPenney's loss should widen from 67 cents last year to $1.20 per share. Sales will drop about 8 percent to $2.78 billion.

Investors might look at Macy's for an outline of what to expect. The nation's second-largest department-store retailer reported its first sales from since first-quarter 2010, citing cooler weather on lighter summer purchases while some consumers are still uncertain about the economy.

Returning CEO Mike Ullman has had to play catch-up, cutting fat, looking for more liquidity, and working with the new store concept Ron Johnson implemented before his departure. Other changes included reinstating certain key brands while making employees easier to identify within stores.

Another issue has been Marth Stewart Celebrations. Bloomberg cites one store manager who said that the department sold about $350 worth of goods one month, amid taking up about 1,000 square feet of space. That's $4 per square foot of revenue, versus $116 per square foot across the entire chain. Given that JCPenney and Macy's are in dispute over rights to Martha Stewart goods, JCPenney has taken products its already produced and renamed them "JCP Everyday" until the suit is settled.

Still, with JCPenney trading near annual lows and hedge fund giant Bill Ackman recently pushing for management changes, any little bit of good news over the coming quarters could spell further upside for the beleaguered retailer.

At least, that's what investors are banking on. Shares of JCPenney are down 1.8 percent Friday.

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