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JCP Shares at 52-Week Low; Investors Head for Exit

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J.C.Penney’s (JCP) chronic underperformance has rattled increasingly anxious investors, sending the mega-retailer’s shares down to a fifty-two week low.

The retail industry as a whole has been surging, with the S&P 500 Retailing Industry Group recording a 1.6% increase to 890.84 on January 30. JCP, however, was down 8.3%, or 52 cents. The ailing company’s shares have slid 36.9% since the conclusion of 2013. Its recent drop in share price is likely attributable to its announcement January 15 that it plans to close thirty-three stores, affecting more than 2,000 jobs.

The mega-retailer, which operates approximately 1,100 stores across the U.S., has found it difficult to recover from the financial spiral it has experienced ever since former CEO Ron Johnson began his tenure.

Nagged by persistent troubles, JCP finally showed signs of renewed vitality for the month of November. Still, many industry analysts expressed disappointment that its gains weren’t more impressive. According to a JCP spokesperson, the retailer increased its sales in November by 10 percent, registering a jump in same-store performance numbers for the second consecutive month. October was also touted by the company as evidence of an increasingly successful turnaround strategy; sales jumped 0.9% for October, a substantial improvement in light of the fact that September suffered a 4% decline. A company spokesperson said that the stronger performance was largely attributable to improved inventory in central private brands as well as an overhaul of the home goods department.

JCP reported that it ended the quarter with $1.23 billion in cash, up from last year’s total of $525 million. It continues to carry a substantial debt load, pegged at approximately $5.61 billion.

For the fiscal period ending November 2, JCP endured a staggering $489 million loss, or $1.94 per share, compared to last year’s $123 million loss, or $0.56 per share. Thomson Reuters analysts had expected a better performance, estimating a per share loss of $1.77.

The last fiscal quarter represented the company’s seventh consecutive quarterly net loss. Revenues have been steadily declining from a peak of almost $20 billion in 2007 to about $12 billion last year. In 2012, the company’s net loss was almost one billion dollars.

Investors have been confused about the distance between JCP’s success charting a turnaround and its own self-assessments, especially by a recent announcement that it was “pleased” with its holiday performance. But JCP neglected to expound upon what precisely this means, choosing not to disclose any further details.

JCP’s reticence has lead to widespread speculation among its suppliers regarding their holiday shopping sales numbers, forcing them to read the economic tea leaves in the absence of hard data. Many say they expect JCP enjoyed  a 5 percent jump in sales for the month of December, just short of the 6.5% anticipated by Thompson Reuters. Others believe JCP is slowly backing away from its practice of releasing monthly sales reports, which often generate wild fluctuations in its share price.

Charles Grom, analyst at Sterne Agee, commented, “The length of JCP’s holiday update tells you everything you need to know about the company’s performance during the five-week December period. Said differently, our gut tells us that if JCP had a good print in their back pocket–they would have disclosed it…in far greater detail.”

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