Lock up the dogs and hide the children. Something wicked will this way come tonight when JC Penney (JCP) allows its earnings to slither out of Dallas. Unlike many earnings reports there isn't a lot of suspense on this one: the company is going to miss and it's going to be ugly. Official estimates are for a loss of 74-cents on revenues of $2.74b compared to a 75-cent loss on $3.2 billion for the same period last year.
How individual investors feel about the results depends entirely on their entry price. JCP stock has risen almost 25% in the last month in a knee-jerk burst of enthusiasm after the firing of former CEO Ron Johnson, an investment by the Soros group, and a $1.75 billion debt deal that ensured the retailer's survival for at least another year.
Those are the good things. On the downside is everything else about the company. The current CEO is the guy Johnson replaced. That means, unlike new bosses who come in to "clean house," Myron "Mike" Ullman actually has a vested interest in Penney's former business model. That being the case, Wall Street's reaction to tonight's earnings report isn't about economics but vision. Specifically, how does Ullman plan to reassemble a company stuck halfway between a radical overhaul that's left stores literally in shambles.
Brian Sozzi of Belus Capital Advisors has been sneaking around the stores taking videos lately and he doesn't like what he sees. "I'm seeing a hodge podge of strategies," frets Sozzi. The stores are an amalgamation of Johnson's hipster colors and lack of discounts coupled with Ullman's hyper-promotional brand of retailing. No one knows what to make of the stores at this point, including management.Read More »from Less is More: JCP Shareholders Need a HUGE Miss Tonight