Bill Ackman Stalked By Ghost Of Pershing Square IV As J.C. Penney Implodes
There was a time when Bill Ackman, constantly misperceived as a retail investing genius, blew up an entire fund solely dedicated to investing in Target, mostly via calls as in something out of Whitney Tilson's wettest dream (incidentally, another "investor" who could not get enough of JCP at $27), Pershing Square IV (full hilarious letter from Pershing Square Capital Punishment to the PSIV investors here). His current massive investment in JCP is luckily not a standalone fund, but it is now certainly stalked by the ghost of PSIV as JCP literally blew up overnight and any hope of the rumored "10-15 return" that Ackman predicted in the stock has now gone up in smoke. Oh well: there is always the gamble on Procter and Gamble.
J.C. Penney Co Inc (JCP) reported a deeper-than-expected drop in quarterly sales at stores open at least a year, the department store chain's second straight quarter of severe sales losses since changing its pricing strategy last winter.
Same-store sales fell 21.7 percent during the second quarter, steeper than the 17.4 percent drop analysts were expecting, according to Thomson Reuters. Revenue tumbled 22.6 percent to $3.02 billion, also below Wall Street's low expectations.
In February Penney eliminated the use of coupons and discounts in favor of everyday low prices. The move has cost the 102-year-old retailer many shoppers.
Penney, whose customers are typically more price sensitive than those of Macy's Inc (NYS:M), reported a net loss of $147 million, or 67 cents per share, for the second quarter, ended July 28, compared with a profit of $14 million, or 7 cents per share, a year ago.
The company said it no longer expects to meet its earlier full-year profit forecast but did not give an updated estimate.
Penney last week debuted its Levi's stores, beginning the next prong of a transformation that will eventually see each of its stores carved into 100 separate boutiques.
Despite the dire second-quarter results, Chief Executive Ron Johnson said Penney "will stay the course."
Well of course it will: courtesy of central planners one can now pretend to ignore relaity forever.