(Adds analyst comment, updates share activity)
By Phil Wahba
Feb 4 J.C. Penney Co Inc shares fell 10
percent on Tuesday after the struggling retailer reported a
disappointing rise in comparable sales for the holiday quarter,
prompting fears its business is recovering too slowly.
Penney also did not provide details on its gross profit
margin, leading Wall Street analysts to conclude the department
store operator had to resort to bigger discounts during the
Sterne Agee lowered its price target on Penney share to $3
from $9, while JP Morgan cuts its target price to $5 from $6.
Shares fell as much as 13.7 percent to $4.90, their lowest
level in decades. They were trading at $5.11 in mid-afternoon
Penney's comparable sales - those online and at stores open
at least a year - rose 2 percent during the fiscal fourth
quarter. That was less than the 4 percent analysts were
expecting, according to Thomson Reuters I/B/E/S.
"The slope of the improvement needed to be much better
to effect the kind of turnaround that JCPenney needs," said
Sterne Agee analyst Charles Grom.
Still, Penney said it had $2 billion in liquidity available
at the end of the quarter, in line with its earlier forecasts,
easing concern about how much cash it was using up as it
attempts to fix its business.
It was the retailer's first three-month period of growth in
two years. But it also came a year after Penney reported a 31.7
percent quarterly decline, as the retailer's now-abandoned
attempt to go up-market by ditching coupons and opening in-store
boutiques for hip brands failed to catch on with shoppers.
"Keep in mind, however, that comparisons for the chain have
been decidedly easy and that JCP likely resorted to very
aggressive price promotions," Oppenheimer analyst Brian Nagel
wrote in a research note.
Chief Executive Officer Myron Ullman pointed to a tough
holiday quarter for retail in general, further hurt by bad
weather, but said Penney's turnaround was "on track."
Retailers from Target Corp and Family Dollar Stores
Inc to Victoria's Secret parent L Brands Inc have
lowered profit forecasts in recent weeks following what analysts
said was the most discount-driven holiday season in years.
In 2013, Penney lined up a $2.25 billion financing package
and in September sold nearly $800 million in new shares to shore
up its finances.
The company last month said it would close 33 of its 1,100
stores and cut 2,000 jobs.
(Reporting by Phil Wahba; Editing by Lisa Von Ahn and James