Fly News Breaks for August 11, 2017
Aug 11, 2017 | 14:58 EDT
Evercore ISI analyst Omar Saad said he is liquidating the 1.3% J.C. Penney Long Position initiated in the firm's Model Portfolio in April with the stock down 30% during that time. While acknowledging he "may be pulling the plug at the bottom," he said the company is doing everything in its power to keep its turnaround on track but efforts just are not working. Asset sales are not a sustainable long-term solution and cost-cutting initiatives are beginning to take a toll on operations, as evidenced by the jump in shrinkage that may be linked to understaffing, said Saad.
News For JCP From the Last 2 Days
Aug 23, 2017 | 11:34 EDT
Shares of Abercrombie & Fitch (ANF) moved higher after peer American Eagle Outfitters (AEO) reported better than expected quarterly amid a trend of disappointing results in the retail sector. Abercrombie & Fitch is scheduled to report Q2 earnings before market open on August 24. AMERICAN EAGLE EARNINGS: Before the market open on Wednesday, American Eagle reported adjusted earnings per share of 19c on revenue of $845M, handily beating analysts' estimates of 16c and $824.04M, respectively. Consolidated comparable sales were up 2%, following a 3% increase last year.The company forecast Q3 EPS of 36c-38c, at the low end of analysts' 38c consensus, on flat to up low single digit SSS. CEO Jay Schottenstein noted on the earnings call that AE's store fleet is "largely profitable" and, despite a slower start to Q2, the company saw demand strengthen in June and July. ABERCROMBIE: In May, Abercrombie & Fitch said it expected comp sales to remain challenging in Q2, with trends improving in the second half of the year. The company also expected a continued adverse impact from foreign currency on sales and operating income and predicted a gross margin rate down slightly vs. last year, with continued pressure in Q2. During the quarter, Abercrombie announced plans to launch its namesake brand and abercrombie kids on Tmall. In July, Abercrombie said it had decided to end talks with parties interested in a potential deal to buy the company. The decision came after Abercrombie said in May that it was in preliminary discussions with several parties, with American Eagle and Cerberus Capital rumored to be working on a joint offer. "The A&F board of directors determined that the best path to enhance value for stockholders is the rigorous execution of our business plan," Abercrombie Executive Chairman Arthur Martinez said at the time. Prior to that, Abercrombie investor SLS Management said the retailer was not being "aggressive enough" in its turnaround efforts and called on the company to buy back a "large" amount of its shares. PEERS: Many mall-based retailers like Abercrombie & Fitch, have been hurt by the slowdown of mall traffic reflecting a shift to fast-fashion retailers like Zara, Forever 21 and H&M as well as an increase in online shopping on sites such as Amazon (AMZN). Urban Outfitters (URBN) recently reported a quarterly earnings beat, though its comp sales declined. "While we are disappointed in our second quarter performance, we have a number of initiatives underway including: speed to customer, international growth, wholesale expansion and digital investments," CEO Richard Hayne said. Macy's (M), Kohl's (KSS) both reported declining quarterly comp sales, though Kohl's EPS and revenue narrowly beat estimates. J.C. Penney (JCP) reported a larger than expected loss for the latest quarter, with its comp sales dropping 1.3%. Gap's (GPS) quarterly results, including comp sales, beat analysts' expectations, helped by Old Navy, a consistent bright spot for the retailer, as well as fewer promotions. Nordstrom (JWN) said in June that members of its founding family formed a group to explore the possibility of pursuing a "going private" transaction, but WWD recently said that the retailer is not in negotiations with "anybody" regarding a potential sale. PRICE ACTION: Shares of Abercrombie & Fitch are up 4.8% to $9.59 in morning trading. "Before the Move" is The Fly's recurring series of exclusive stories that identify potentially market moving events, along with analyst predictions, ahead of the news.
Aug 22, 2017 | 08:35 EDT
JCPenney is launching Frank + Lulu, "a whimsical new brand of bedding and decor for kids. Featuring bright colors and fun prints, shoppers will find various collections within the brand designed to mix-and-match elements to create a youthful design aesthetic. From bedding and sheets to decorative pillows and rugs, parents can create a stylish, inspirational kid's room to spark imagination and a blissful night's sleep. Available exclusively at JCPenney, Frank + Lulu is available at jcpenney.com and will launch in over 200 stores beginning Sept. 1, with plans to introduce additional collections to more stores this fall."