Short Squeeze in JC Penney

Retailer reports Q3 revenue $2.81B, consensus $2.74B

JC Penney's woes continue. See Stockwinners.com for details

J.C. Penney  (JCP) reported its first increase in same-store sales in more than a year and losses were not as bad as expected, sending shares higher.

The company had a loss of $128 million for the third quarter, or 41 cents per share. Losses, adjusted for one-time gains and costs, came to 33 cents per share, which is a dime better than Wall Street had expected.

Revenue, at $2.81 billion, also topped expectations of $2,74 billion.

J.C. Penney backs FY17 adjusted EPS 2c-8c, consensus 43c – Backs FY17 SSS down 1% to flat. Backs FY17 cost of goods sold to be up 100 to 120 basis points versus 2016. Backs Free cash flow view $200M-$300M.

Chairman and CEO Marvin Ellison said on the company’s Q3 earnings conference call that J.C. Penney took “the bold but necessary step” to liquidate apparel inventory in an effort to accelerate a wider transformation of the women’s department. Following this reset, Ellison said the retailer saw improved performance in the women’s division, “confirming these actions were necessary to drive growth in this high-volume apparel division.” Ellison noted that women’s apparel delivered a positive comp for the month of October “even when you remove the benefits of the accelerated clearance sales.” “At this stage of our turnaround, we are committed to making decisions that benefit the long-term financial health of the company,” Ellison said. Appliance sales more than doubled versus Q3 of last year, he added.

SHORT  RATIO

The short ratio, short interest ratio (SIR) or float short for a public company is the ratio of tradable shares being shorted to shares in the market, or the float. It is an indirect metric of investor sentiment. When short interest is high, above 40%, it implies company investors hope shares will decline in value.

SHORT  INTEREST

A situation in which a heavily shorted stock or commodity moves sharply higher, forcing more short sellers to close out their short positions and adding to the upward pressure on the stock. A short squeeze implies that short sellers are being squeezed out of their short positions, usually at a loss.

According to the latest data, a total of 148,287,000  JCP shares have been shorted, giving the stock a short ratio of 7.5 days. That is 50.73% of total shares.

PRICE  ACTION

JCP closed at $2.75. It last traded at $3.18. The issue has a 52-weeks trading range of $2.35 – $10.74.


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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