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Canaccord Genuity on JC Penney (NYSE:JCP), Norfolk Southern (NYSE:NSC), and Wal-Mart (NYSE:WMT)


JC Penney and Norfolk Southern shares tumble while Wal-Mart rejects Amazon's Kindle.

The following are excerpts from Canaccord Genuity analysts' commentaries.

JC Penney (NYSE:JCP): Was It Something I Said?

JC Penney got pummeled after its Analyst Day during which Chief Executive Ron Johnson essentially wrote off the rest of the 2012, saying the H2/12 would be just as painful as the first half. The outlook marks a tough holiday season for the former Apple (NASDAQ:AAPL) executive, who is trying to liven up JC Penney's image and wean the company off of the relentless discounting that his predecessors had used to lure shoppers. Johnson, who took the top job last November, has changed the look and feel of JC Penney's stores and advertising, and replaced regular sales and coupons with broadly lower prices. However, consumers have yet to respond. This lead to a sizeable $310 million loss on a 21% sales drop in the in H1/12.

While Johnson did share some encouraging signs about JC Penney's strategy, investors focused more on his affirmation that that the turnaround would take time. "It has been a very hard year," he said. "We're planning the back half to be very similar to the first half." Johnson warned that he expects continued challenges as the company works to wean its customers off coupons. Additionally, while back-to-school sales were strong, the last two weeks have been a lot tougher. On a positive note, Johnson said sales at new boutique shops (shops within the store that emphasize brand names) were running 20% higher than the rest of the store. However, these higher sales weren't enough to boost JC Penney's overall sales. A Deutsche Bank analyst commented that while JC Penney is taking steps in the right direction, he believes the road to recovery is still a few years off. Meanwhile, a JPMorgan analyst cautiously said, "Store evolution continues with initial shop productivity encouraging."

Norfolk Southern (NYSE:NSC): Chugga Chugga, Choo Choo!

Shares of Norfolk Southern were down sharply after the company lowered its earnings expectations for the coming quarter. For the upcoming Q3/12 period, the company now expects to earn $1.18 - $1.25 per share. This is down meaningfully from previous expectations of $1.63 for the quarter. Decreased coal and merchandise shipments, offset in part by growth in intermodal volumes, are together expected to reduce revenues by approximately $120 million compared with third quarter 2011.
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No positions in stocks mentioned.
Canaccord Financial and its affiliated companies may have a Corporate Finance or other relationship with the companies mentioned and may trade in any of the Designated  Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage herein.
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