J.C. Penney Stock Drops As Questions On Strategy Grow |
| Wall Street Journal - May 16, 2012 |
J.C. Penney Co. (JCP) is seeing its shares tumble in the aftermath of the chasm-sized first-quarter loss the retailer posted after Tuesday's close, out of concern that its transformation may, at the very least, take longer than planned and, at the very worst, not work.
Given that shoppers aren't accepting Penney's non-promotional approach to selling merchandise, there is no near-term catalyst for sales, analysts said. The 18.9% drop in same-store sales that Penney reported came on a 10% drop in customer traffic, as the retailer failed to draw people in.
The concerns sent shares down 18% to $27.49 in recent trading. Investors who bought in when Chief Executive Ron Johnson disclosed the retailer's plans in late January and the stock surged had already lost that gain before Penney posted first-quarter results after Tuesday's close, so they are now losing money and perhaps patience.
Investors are also losing their dividend, at least for a time. J.C. Penney said it is suspending its dividend, the first Standard & Poor's 500 company to do so since February 2010, when Tesoro Corp. (TSO) halted its payout, according to S&P. In fact, no retailer has suspended its dividend going back to at least 2003.
Read Full Article from Wall Street Journal
- Posted: 2012-05-16 14:28:35
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