JCPenney Reports Horrific Results, Stock Plunges

[Glass]

I know the name but not the store, other than it's a clothing outlet.

These figures, expecially the cash burn numbers remind me of the dot com boom, Amazons cash burn amongst others.


http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg (http://www.zerohedge.com/users/tyler-durden)

JCPenney Reports Horrific Results, Stock Plunges (http://www.zerohedge.com/news/2013-02-27/jcpenney-reports-horrific-results-stock-plunges)

Submitted by Tyler Durden (http://www.zerohedge.com/users/tyler-durden) on 02/27/2013 - 16:53 At what point does Bill Ackman throw in the towel and admit that his latest windmill crusade is unsalvageable? Perhaps somewhere around now:


Q4 EPS: ($1.95), Exp. ($0.19) - No, there was no decimal comma error here.
Q4 Revenues: $3.884 billion, Exp. $4.09 billion. This includes a "free" 53rd week in the year which generated $163 million. Ex this, Q4 revenue was $3.721 billion.
Q4 Comp store sales excluding the 53rd week were down 31.7%
Q4 Interent sales down 34.4% - must be the store layout's fault
Q4 Gross margin: 23.8%, Exp. 30.9%; (30.2% last); "Gross margin was impacted by lower than expected sales and a higher level of clearance merchandise sales related to inventory reductions in 2012"
2012 cash burn was a gargantuan $906 million; this compares to cash flow of +$23 million in 2011.


And so on. Stock should be down much more, but someone keeps on buying it after hours to telegraph that this epic disaster was "expected"



Some other points



Company is down to $2.3 billion in inventory. We wonder how the credit facility will feel about this.
Speaking of credit facility, JCP had no borrowings under its 2012 Revolver, and about $1.3 billion available net of L/Cs. Expect these numbers to change.


And so on. Stock should be down much more, but someone keeps on buying it after hours to telegraph that this epic disaster was "expected"... though as the evning wears on reality sets in... -10% now



Link to Zerohedge (http://www.zerohedge.com/news/2013-02-27/jcpenney-reports-horrific-results-stock-plunges) and chart of doom.

A lot of sales are cratering. I saw that Starbucks is flogging Blonde coffee now. Somewhere else I read, like the horse meat substitution, coffee makers were going to a different and cheaper bean called a robusta (http://en.wikipedia.org/wiki/Coffee). I wondered if the Blonde coffee was Starbucks way of spinning the change.

Austerity is starting to appear everywhere and building momentum.

[Twisted Titan]

If JC penny goes belly up....there is nothing to stop Macy and Lord a Taylor going down the same road.

Malls would lose their anchor store tenants

[Cebu_4_2]

This is definitely big, Most of the malls and strip malls were, well stripped in MI. I was actually shocked to see this a few years back. Here is your austerity folks.

[Kali]

Malls would lose their anchor store tenants

That's what I thought when Gottchalks went under. They had 3 floors of mall space.

The space was quickly rented by Fashion 21.

[mick silver]

the stock market keeps telling me every thing is great

[jimswift]

the stock market keeps telling me every thing is great

I had some boob in my office saying that very thing to another client the other day. He was hanging on to it so dearly as if it were real.

[madfranks]

the stock market keeps telling me every thing is great

Yeah, it's testing all time highs, so everything must be great. This JCPenny thing is just a mirage.

[mamboni]

JC Penny is a bellweather for retail sales. If they are seeing crashing revenues and profits, it tells you that the consumer economy is in the shitter. And consumer spending is 70% of US GDP. Small business owners I know are telling me that volume is way down and things are horrible. They all look visably scared.

TPTB are desperate to create the illusion of recovery. The stock market is being levitated wiht free money from the Bernank. Insiders are selling stocks big. TPTB are painting the gold and silver charts to destroy any bullish technical indicators and discourage metals longs, as if the laws of basic economics can be suspended indefinitely. They know that the sheep are stupid and will sit in a freezing ice box and claim that they are warm because the thermometer says it's 98F. They inexplicably ignore the hook-nosed gremlin who waves a lighter flame under the thermometer bulb every now and then. They won't figure out that they're actually freezing to death until their peckers turn black and fall off from frostbite. If you own gold and silver, you have a thick fur coat on and cup of hot chocolate in your hand. The sheeple think you're crazy. But you're feeling quite fine.

Many will ask that if the inevitable collapse of the paper Ponzi cannot be avoided, why do TPTB bother with all these market manipulation shenanigans. The answer is the same reason passengers ran to the aft of the Titanic when it was sinking, knowing full well that they were going into the freezing water to die no matter what: to buy some time. You should be asking: time to do what?

That's the rub.

[mamboni]

the stock market keeps telling me every thing is great


You forgot /sarc. LOL

[madfranks]

I've been thinking about this. Could it be that it's not that sales are being lost, rather they are being transferred to other retailers? One thing to consider, the biggest online retailer of them all, amazon.com, has stock going up while JCP stock goes down. Could part of this be the transition from big box stores to online retailers? Remember when barnes and noble shut down, it wasn't because of insufficient demand, it was because e-readers and online book sellers were out-competing them on every level. We are not poorer because of B&N going out of business, in fact books are cheaper and more plentiful than ever. With amazon taking larger and larger pieces of the retail world, the loss of some big box stores would be expected. But we are not poorer for it.

[Dogman]

I've been thinking about this. Could it be that it's not that sales are being lost, rather they are being transferred to other retailers? One thing to consider, the biggest online retailer of them all, amazon.com, has stock going up while JCP stock goes down. Could part of this be the transition from big box stores to online retailers? Remember when barnes and noble shut down, it wasn't because of insufficient demand, it was because e-readers and online book sellers were out-competing them on every level. We are not poorer because of B&N going out of business, in fact books are cheaper and more plentiful than ever. With amazon taking larger and larger pieces of the retail world, the loss of some big box stores would be expected. But we are not poorer for it.

Your thought have merit!

But one thing that comes to mind concerning clothing, "sizes" in a bunch of ways are not really exact.

So fit and fitting is important and one can not do that over the net.

[Glass]

Wal-Mart Situation "Getting Worse" New Leaks Reveal

Two weeks ago, Wal-Mart stunned the world (http://www.zerohedge.com/news/2013-02-15/wal-mart-stock-drops-after-it-says-february-sales-total-disaster-worst-montly-start-)when a leaked memo discloses that February sales had been a "total disaster" and the company was facing the worst February start since 2006. Today, Bloomberg's deep throat (http://www.bloomberg.com/news/2013-02-27/wal-mart-s-slowness-stock-shelves-worsens-as-sales-stay-s.html)in Bentonville strikes again, as a new leak emerges. "Wal-Mart Stores Inc (WMT), already struggling to woo shoppers constrained by higher taxes, is “"getting worse" at keeping shelves stocked, the retailer’s U.S. chief told executives, according to minutes of an officers’ meeting obtained by Bloomberg News. "We run out quickly and the new stuff doesn’t come in," U.S. Chief Executive Officer Bill Simon said, according to the minutes of the Feb. 1 meeting. Simon called “self-inflicted wounds” Wal-Mart’s “biggest risk” and said an executive vice president had been appointed to fix the restocking problem, according to the minutes."

So even as the market completely ignored the Wal-Mart revenue issue, which is "getting worse", the bigger problem is that now it appears to be affecting the company's supply-chain, which likely means that all of WMT's upstream vendors are suffering from the same malaise that has gripped all those entities that still rely on such historical trivia as profitability and cash flow:

Wal-Mart’s inability to keep its shelves stocked coincides with slowing sales growth. Same-store sales in the U.S. for the 13 weeks ending April 26 will be little changed, Simon said in the company’s Feb. 21 earnings call. Comparable sales increased 1 percent in the fourth quarter, compared with an average of 1.4 percent from analysts surveyed by Bloomberg. This year the shares gained 4.2 percent through yesterday, compared with a 5 percent advance for the Standard & Poor’s 500 Index.

Evelin Cruz, a department manager at the Wal-Mart Supercenter in Pico Rivera, California, said Simon’s comments from the officers’ meeting were “dead on.”

“There are gaps where merchandise is missing,” Cruz said in a telephone interview. “We are not talking about a couple of empty shelves. This is throughout the store in every store. Some places look like they’re going out of business.”

Cruz, 41, who has worked at Wal-Mart for nine years and oversees the photo and wireless sections at her store, said it can take weeks or months for merchandise to be replaced after it sells out.

“My camera bar hasn’t had cameras since early January,” she said. “They let the merchandise phase out but nothing new comes in to replace them. We’re supposed to have 72 cameras but we maybe have 12. What are customers supposed to buy?”


Sure enough, WMT again has pre-canned (pardon the pun) excuses for what this second leak is supposed to mean:

“There’s a number of misinterpretations and half- thoughts” in the documents, which were not official company minutes, David Tovar, a Wal-Mart spokesman said in a telephone interview.

When Simon said things were “getting worse” he was referring to “modular changes,” the process of replenishing merchandise to keep up with customer demand and changing seasons, Tovar said. Wal-Mart is working to “manage this in the most efficient way possible,” he said.

“We’re very pleased with our in-stock position,” he said, adding that products audited by the company and its consultants match or exceed historical levels. He declined to disclose what those levels are.

Tovar declined to make Simon available for comment

Naturally, following WMT's earnings, which showed that in the fourth quarter all was well, the market promptly forgot the recent "totally disastrous", completely oblivious that February is in the current quarter, and the management is obviously stonewalling the reality facing the retailer.
Yet if indeed there is a major issue affecting the world's most efficient logistical chain, what can other retailers say? And what are the implications for all other global trade routes, both macro and micro? Because if trade, which has been a casualty of central planning for years, is buckling, then is the scenario so vividly described in ""Trade-Off": A Study In Global Systemic Collapse (http://www.zerohedge.com/news/trade-study-global-systemic-collapse)" finally starting to come true?



Link to Zerohedge (http://www.zerohedge.com/news/2013-02-27/wal-mart-situation-getting-worse-new-leaks-reveal)

[mamboni]

I've been thinking about this. Could it be that it's not that sales are being lost, rather they are being transferred to other retailers? One thing to consider, the biggest online retailer of them all, amazon.com, has stock going up while JCP stock goes down. Could part of this be the transition from big box stores to online retailers? Remember when barnes and noble shut down, it wasn't because of insufficient demand, it was because e-readers and online book sellers were out-competing them on every level. We are not poorer because of B&N going out of business, in fact books are cheaper and more plentiful than ever. With amazon taking larger and larger pieces of the retail world, the loss of some big box stores would be expected. But we are not poorer for it.

This is no doubt contributing to the demise of brick and mortar retail. But sales are also down overall. The American consumer is tapped out, unemployed, in debt and tuned out.

[EE_]

This is no doubt contributing to the demise of brick and mortar retail. But sales are also down overall. The American consumer is tapped out, unemployed, in debt and tuned out.

Maybe consumers are buying stocks? Look at the Dow go!
Is gold and silver dead now that the recovery is really taking hold?

[mamboni]

Maybe consumers are buying stocks? Look at the Dow go!
Is gold and silver dead now that the recovery is really taking hold?

Yes! And I just saw a pig fly by my window! Yippee!!! America is back!! You see you see! We are special!!!

[EE_]

Yes! And I just saw a pig fly by my window! Yippee!!! America is back!! You see you see! We are special!!!

Maybe we have it all wrong and the useless consumers aren't needed in the economy anymore.
Maybe there's enough people with money and many that have all the money to have a strong economy?

[mamboni]

Maybe we have it all wrong and the useless consumers aren't needed in the economy anymore.
Maybe there's enough people with money and many that have all the money to have a strong economy?

Perhaps, if my aunt had balls she'd be my uncle too. So many things to speculate on, so little time.

[Twisted Titan]

I remember reading or watching something on TV a long time ago something that is off similar comparison to what Mamboni is talking about.


You Know another Company that is being proped up like JCP?

Disney Amusment Parks.

I cant recall where i was told this but its been said Disney hasnt turned a profit in years but wont be allowed to fail because it has become a huge symbol of americana.

When you think about it. ...that has some truth to it..

I almost fainted when i saw whay Disney will charge a family of 4 to go through just in theme park and if you stay on the grounds and included major attractions and in house food you can litterally put a second mortage on the house if you plan to stay for 7 days.

How are they able to stay open and charge so much and continually add new attractions in the face of unbelieable economic headwinds?

It has to be some form of MASSIVE not easily seen gubbermint subsidy.

I remember seeing realtors selling timeshares and their crowing hook of the sales pitch was that: your property will always have value because it litterally stands in the shadow of the magic kingdom.

If disney closed it would leave a economic crater that size of the grand canyon.

I guess JCP must have a similar clout to the retail sector.

[Hillbilly]

John Cash Penny's stores might be doing bad because of their in your face pro gay agenda. I know I don't shop there anymore because of that.

[mick silver]

if you cant hold it you dont own it . i know when i use paper to buy things i can use the stuff more then once , never pass up tools when you get them almost for free at sales . and then sales are ever were now . farm stuff saling for 1/4 of what new stuff is now .

[madfranks]

John Cash Penny's stores might be doing bad because of their in your face pro gay agenda. I know I don't shop there anymore because of that.

I didn't know that, but I don't remember the last time I stepped foot in a JCP so I really wouldn't know. I would bet however, that the "horrific results" per the OP are more economic in nature than cultural.

[gunDriller]

the stock market keeps telling me every thing is great

Yep. it's near all-time highs, while Gold & Silver sentiment are described as long time investors as being near all-time lows, as bad as they can remember. all the short term momentum investors have (e.g. hedge funds) have given up on Paper Gold and Paper Silver.

bummer !

meanwhile, central bank buying + industrial usage + buying by dedicated long-term investors - buying of the real physical thing - is about 2 x annual production for Gold, w/ comparable demand for physical silver.

historic bull market runs tend to follow such periods of low enthusiasm.


the Cartel is doing their damndest to beat prices down.

[Glass]

Might maybe should be in a thread of it's own but it's an indicator.... maybe even a dead canary


Detroit To Be Taken Over By The State

Usually, when the administration needs a distraction from just how broke and insolvent in reality the country is, it sends the stock market soaring higher. As such it is beyond ironic that as the S&P is set to hit an all time high, Detroit - that shining symbol of the Obama administration's bailout of General Motors - effectively goes broke.
MICH. GOV SNYDER TO ANNOUNCE STATE TAKEOVER OF DETROIT


Detroit Mayor Dave Bing says Governor Rick Snyder will announce a state takeover on Friday
Detroit Mayor Dave Bing says Michigan Governor Rick Snyder will announce a state takeover of the city of Detroit on Friday.

Bing says the governor told him his decision during a phone conversation this morning. Bing was talking with reporters following a speech before the Detroit Regional Chamber at the MotorCity Casino.

The city will have 10 days to appeal the decision to the governor.

7 Action News has teams working the story to get more details.



Link to Zerohedge (http://www.zerohedge.com/news/2013-02-28/detroit-be-taken-over-state)

[Horn]

MICH. GOV SNYDER TO ANNOUNCE STATE TAKEOVER OF DETROIT

It could only get worse from there.

[osoab]

Might maybe should be in a thread of it's own but it's an indicator.... maybe even a dead canary


Link to Zerohedge (http://www.zerohedge.com/news/2013-02-28/detroit-be-taken-over-state)




It's long overdue but it won't help. So, it really doesn't matter. :(

[Silver Rocket Bitches!]

I don't see these dismal sales numbers for Sachs Fifth Avenue and Neiman Marcus.