NEW YORK, NY / ACCESSWIRE / June 25, 2018 / J.C. Penney shares slumped on Friday, despite a former executive remarking on the recent Supreme Court ruling to allow states to impose sales tax on online retailers being a good thing. Shares of Macy's also slumped on a "neutral" rating from UBS.
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J. C. Penney Company, Inc.
J. C. Penney Company, Inc. shares closed down 5.07% on about 25.9 million shares traded on Friday. The struggling retailer saw its shares drop despite a former J.C. Penney CEO Allen Questrom remarking on how good is the Supreme Court's decision to allow states to impose sales tax on online retailers. The Court ruled that states can force online retailers to charge sales tax, overturning a 1992 ruling that stores without a "physical presence" in a state were not required to charge consumers sales taxes. Retail expert Jan Kniffen spoke to CNBC's On the Money and remarked about the previous ruling, "We all knew at the time this it was going to be a real problem because it will create a differential in pricing." He further said, "The good news at the time was online was so small, nobody was too concerned about it. But we all saw something coming there." He further explained about the ruling, "If you buy something in New York and have it shipped to New Jersey, you don't pay New York tax, you don't pay New Jersey tax. But you owe New Jersey tax. But nobody pays it." According to the Supreme Court, which cited the California tax board, 96% didn't pay the tax.
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Macy's, Inc. shares closed down 4.81% on Friday on lackluster trading volume compared to usual. The stock slipped after a UBS analyst initiated coverage on the stock with a "neutral" rating and a $39 price target. Analyst Jay Sole was very optimistic about Nordstrom, which he gave a "buy" rating to as well as a $69 price target. The analyst noted that the company's 23% share loss since 2012 will be hard to reverse and he expects revenue to keep dropping. The firm has projected that EBIT margins will continue to shift downward from 10% in fiscal 2012 to 6% in fiscal 2022. It was in May that Macy's reported fiscal first quarter 2018 financial results where both sales and earnings sailed by what analysts had been expecting. The company earned an adjusted EPS of $0.48 on revenue of $5.54 billion beating the analyst expectation of EPS of $0.37 on revenue of $5.4 billion. Macy's had also upped its EPS guidance for full year 2018 by $0.20 to a range of $3.75 to $3.95.
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