JC Penney Had A Worse September Than The Street Is Expecting

B. Riley’s Jeff Van Sinderen mentioned that industry checks indicate there have been increased headwind for seasonal apparel categories during September, possibly exacerbated by the warm weather.

Van Sinderen maintained a Buy rating on J C Penney Company Inc (NYSE: JCP), with a price target of $16.

September Headwinds

“We also suspect that an increased level of consumer distraction/uneasiness around recent shootings/political demonstrations and generalized distraction around the upcoming Presidential election are having an impact on the JCP customer,” the analyst explained.

Van Sinderen believes that JC Penney would need a recovery in comp trends in October to be able to hit the consensus comp forecast of 3.1 percent for Q3.

However, if the Q3 comp is soft, the company would need to achieve 4-5 percent comp in Q4 to be able to meet if targets for H2.

Related Link: How Does Target's New $5 Billion Buyback Plan Stack Up Against Other Retailers?

Guidance Concerns

“Center core refreshes, appliances, window treatments, flooring, Boutique+ and 60 new Sephora stores represent comp drivers, especially for Q4, but without a sharp acceleration in trend, the company’s guidance of a 3‐4 percent comp for the FY could prove to be aggressive,” the analyst stated.

However, Van Sinderen pointed out that while the stock continued to be highly speculative and positive comps were needed for a turnaround, JC Penney’s longer term potential remained unchanged.

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