OUR IDEAS: SELL SHORT JCP @ $14.25 OR BETTER. OUR TARGET: $11.00 The Dow continues to make new highs but with weak volume. We see this as a big negative, it sure is a problem. For us, this is a reflection that what we have in hand is a rally with poor conviction. On Friday the indexes closed as follows: Dow closed +30.34 at 15658.36, Nasdaq +13.84 at 3689.59, and the S&P +2.80 at 1709.67 The jobs report was weak: Nonfarm payrolls just added 162,000 jobs after adding a downwardly revised 188,000 (from 195,000) in June. Consensus expected 175,000 new payrolls. This proved to be a disappointment. Also, the average workweek dropped to 34.4 hours from 34.5 and average hourly earnings declined 0.1%. Altogether, aggregate wages fell 0.3%. This will impact negatively company earnings looking forward, especially for companies in the retail sector. Our technical indicators continue to look weak despite the rise on the indexes, therefore we will continue to stick to our bearish stance. Today we are adding another position to our shorts: A major retailer that continues to lose money: J. C. Penney Company, Inc. (JCP). J. C. Penney Company, Inc. (jcpenney), is a holding company. The Company is a retailer, operating 1,102 department stores in 49 states and Puerto Rico. Its business consists of selling merchandise and services to consumers through its department stores and through its Internet Website at jcp. As of January 28, 2012, its supply chain network operated 27 facilities at 18 locations, of which nine were owned, with multiple types of distribution activities housed in certain owned locations. Its operating subsidiary is J. C. Penney Corporation, Inc. For the 13 weeks ended 04 May 2013, J.C. Penney Company, Inc. revenues decreased 16% to $2.64B. Net loss increased from $163M to $348M. Revenues reflect Value of Retail Sales decrease of 16% to $2.42B, Online Sales decrease of 20% to $217M. Higher net loss reflects Merchandise Margins, Total -% decrease of 18% to 30.8%, Depreciation and amortization increase of 9% to $136M (expense). For more about us please email edgar.desola@desolacapitalpartners
Posted on: Sun, 04 Aug 2013 21:17:21 +0000
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