Tomahawk, WI 7/31/2013 (Basicsmedia) – J.C. Penney Company, Inc. (NYSE:JCP) is a holding company. The company is on retail business, operating through 1,102 department stores in 49 states and Puerto Rico as of January 28, 2012. The company is engaged in selling merchandise and services both through department stores and its internet website jcp.com. In November 2011, the company successfully acquired worldwide rights for Liz Claiborne line of trademarks and related intellectual property, along with Puerto Rico and the United States for the Monet trademarks and related intellectual property.
Hedge Fund manager David Einhorn closed the ailing retailer J.C. Penny’s stock short. This is evident of the fact that the manager is prospective of a fall in the value of shares in the coming future. The company had in the previous year gained confidence among investors on the superfluous promises put forth by its CEO, who was later fired by the Board of the company before he could leave the shares to become penny stocks. Since then, the company has witnessed a downturn in its revenues and earnings.
However, decisions by hedge fund managers cannot be the only decisive factors, when it comes to shareholders making the decision. Moreover, most shareholders have the notion that such hedge funds are nothing but slow, old financial tools of the past.
To support this, in a contradictory prediction by analyst Bernard Sosnick of Gilford Securities, he predicts the company would emerge on the back of improved 2Q2013 quarter performance. This would trigger a rally taking the stock’s prices to anything in the level of $20 to $25. The firm had earlier on Jul 2 predicted a normalized clearance rate of 15-16% during the second half of 2013. However, it is predicted that the gross margins of the company would be under pressure during the second half of 2013. This will however be offset by the clearance activity in July, which is predicted to be less than a year ago. The company is now left with the only option of increasing its sale, which is also evident by the fact that it has started introducing promotional inducements, which has led to improved footfalls. Since its gross margins will be under pressure because of rising costs, and its prices under constant vigil, increasing the volumes in which it trades is the only option left with the company to turn its fortunes. Therefore, the company is also predicted to improve its sales figure during September and October, on the back of promotional events on Labour and Columbus days.
The company has been facing challenges, both common to the retail industry and the company in specific. The company suffers from weak financial base, which was checked only after the company succeeded in securing itself a $2.25 billion loan. The company is optimistic, which is evident by the fact that it has of late been trying hard to push sales, with a radical change in its pricing strategy. However, recent reports have also raised questions on the veracity of the price the retailer has to offer, and whether it is a bargain as the customer thinks.