J.C. Penney Rises After CEO Says Overhaul Is ‘On Track’

To contact us Click HERE
If you fire all you full time staff and get rid of benefits your profits will rise right? 
This story is full of contradictions and corporate BS. QB

"Second-quarter revenue slid 23 percent to $3.02 billion, the company said today." The company’s gross margin narrowed to 33.2 percent from 38.3 percent a year earlier. Retail cannot survive on margins like that So what will they do? "announced more than 1,000 job cuts to reduce expenses and last month said 350 positions would be cut at the company’s headquarters." That solves everything right? Fire people and downsize. I would not be holding any JCP at this time. QB


J.C. Penney Co. (JCP) rose the most in more than six months after Chief Executive Officer Ron Johnson said his overhaul of the department-store chain is “on track” amid quarterly losses and plunging sales.J.C. Penney climbed 5.9 percent to $23.40 at the close in New York, the biggest one-day gain since Jan. 26. Before Johnson’s remarks, the shares dropped as much as 12 percent as the company posted a $147 million second-quarter loss and said it wouldn’t meet its profit forecast for the year.Enlarge imageJ.C. Penney said it no longer expects to meet its previously issued profit forecast for its fiscal 2012. Photographer: Daniel Acker/Bloomberg
1:42Aug. 10 (Bloomberg) -- Bloomberg's Sheila Dharmarajan reports that J.C. Penney CEO Ron Johnson acknowledges mistakes made in pricing and marketing as he spoke today on the company’s earnings call. J.C. Penney reported a second-quarter loss wider than expected and cut its annual profit forecast. She speaks on Bloomberg Television's "In The Loop."Johnson, the former Apple Inc. (AAPL) retail chief who joined as CEO in November, is tweaking his pricing strategy after the previous plan confused customers by reducing sales events and coupons. Second-quarter revenue slid 23 percent to $3.02 billion, the company said today. That trailed analysts’ $3.18 billion average estimate for the lowest quarterly sales since at least 1989, according to data compiled by Bloomberg.“I’m completely convinced that our transformation is on track,” Johnson told analysts and investors at a presentation today inNew York. When unveiling plans for the overhaul in January, “we said this would be a really tough year. Somehow, I don’t think that message got through.”

Annual Forecast

On Jan. 26, the company said profit excluding some items would meet or exceed $2.16 a share this year on Johnson’s turnaround plan. The forecast topped analysts’ estimates and sent the shares surging the most since at least 1980 that day. Today, the company said it no longer expects to meet that forecast, which was reiterated in May, and didn’t provide a new projection, saying it will plan for similar trends as the past two quarters.Investors and analysts had high expectations after the Jan. 26 presentation as Johnson said the retailer wouldn’t provide the annual forecast if it didn’t have “extraordinary confidence we could meet or exceed.” Chief Operating Officer Mike Kramer said in the same presentation the management team is “not going to commit to anything that we’re not confident we can hit.”The fiscal second-quarter net loss of 67 cents a share compares with net income of $14 million, or 7 cents, a year earlier, the Plano, Texas-based company said in a statement. Excluding some items, the loss was 37 cents a share. The average estimate of nine analysts surveyed by Bloomberg was for a 14- cent loss.

Outlet Exit

Part of the sales decline was due to the retailer exiting its outlet business, J.C. Penney said. Sales also were hurt by a cut in marketing in July as the company adjusted its pricing strategy and outlined its back-to-school shopping strategy, J.C. Penney said.Comparable-store sales fell 22 percent in the quarter while Internet sales plummeted 33 percent to $220 million.The stock started to rise after Johnson’s presentation based on his conviction in the new store model and willingness to make changes, said Steven Kiel, the founder of Annandale, Virginia-based Arquitos Capital Management LLC, which holds J.C. Penney shares.“They have plenty of cash, there’s no reason why they don’t have six to nine months to a year to actually see all of this working,” Kiel said in a telephone interview.J.C. Penney is switching to a two-tiered pricing system of everyday low prices and clearance items and has said it would promote price matching for the first time. The previous strategy had three tiers, consisting of regular prices, monthlong sales on seasonal items and two “best prices” promotions each month, which Johnson said today was confusing.

Alienated Customers

http://www.bloomberg.com/news/2012-08-10/j-c-penney-loss-is-larger-than-estimated.html

Also from the Disciplined Investor 

Corn: Important Considerations We Are Watching

August 10, 2012 2:41 pm

We are watching corn pricing closely as it has a direct effect on the profitability of many companies. It also will be important when considering the cost of gasoline at the pumps.
In particular, we are interested as we are long a few of the poultry distributors as mentioned HERE and short Buffalo Wild Wings.

The crop report (view report) was bullish for corn today, but not as bullish as some expected. Initially corn futures popped on the release at 8:30am, but has since come down 4% from that level.

Earlier this morning, we posted a video of the levels to watch from TAS Professional.
Here are a few more charts to consider.
http://www.thedisciplinedinvestor.com/blog/2012/08/10/corn-important-considerations-we-are-watching/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+thedisciplinedinvestor%2FEBHR+%28The+Disciplined+Investor%29