J C Penney Company Inc (NYSE: JCP) stock crashed more than 17 percent Friday to its lowest level since the 1980s after the company issued deep cuts to its 2017 guidance ahead of the critical holiday shopping season. The latest cut only adds to investor concerns that JCP will be unable to save its struggling business.
Penney’s says it expects to report a third-quarter adjusted loss of 40 to 45 cents per share, more than double the 18-cent EPS loss analysts were expecting.
The company also said its full-year comparable-store sales growth will be flat at best. The company previously guided for sales growth of up to 1 percent.
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Finally, the company reduced its full-year adjusted EPS guidance from a range between 40 and 65 cents to a new range between 2 and 8 cents.
In a statement, CEO Marvin Ellison tries to put a positive spin on a negative headline. Ellison says the company has been focused on clearing inventory by aggressively slashing prices ahead of the holiday season.
“We took the necessary steps to accelerate inventory liquidation primarily across all apparel divisions, which increases available funding to invest in new trending merchandise categories,” Ellison says.
JCP’s third-quarter woes were bad enough to drag down nearly the entire U.S. brick-and-mortar retail group. Sears Holdings Corp. ( SHLD), Kohl’s Corp. ( KSS) and Macy’s ( M) fell more than 5 percent.
Meanwhile, Amazon.com ( AMZN) delivered a huge earnings beat on Thursday, sending the stock higher by more than 11 percent on Friday. Amazon has been gaining retail market share in recent years.
At this point, there’s little reason for long-term optimism for JCP stock, and the company can’t keep cutting costs forever. Ricardo Rubi, retail marketing specialist and partner at consulting form Simon Kucher, says there is no evidence a comeback is in the works.
“Cost-cutting measures have been their sole respirator,” Rubi says, according to TheStreet. “It could keep on going like this for a couple of years, but at the end of the day, there probably won’t be a big turnaround.”
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JCP stock is down 94.4 percent in the past 10 years.
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J C Penney Company Inc (JCP) Falls to 30-Year Low originally appeared on usnews.com
