At Least J.C. Penney Has a Great Personality

When you have nothing nice to say, give vague glowing praise that doesn't answer the question at hand.

• How does she look? She has a nice personality.
• Would you recommend this former employee? He was punctual.
• How did the holiday-shopping season go, J.C. Penney ? The company is pleased with its performance for the holiday period, showing continued progress in its turnaround efforts.

In short, J.C. Penney has a nice personality -- and it's punctual -- because it's not much to look at and it's not getting the job done.

The struggling department-store chain didn't have a problem bragging about posting positive comps in October for the first time since 2011. It had no problem getting specific when boasting about its 10.1% spike in same-store sales in November. But merely sticking to earlier guidance and voicing pleasure in its turnaround efforts isn't enough.

Growing after posting a horrendous holiday quarter a year earlier was never going to be a major achievement. Comps plunged 31.7% during last year's seasonally relevant period. We never got the monthly breakdown for how November, December, and January went, but it should have been clear that a mere 10.1% increase in November wasn't going to be enough to call this a turnaround. Even then it's not as if J.C. Penney was a lot of help. Comps don't take us beneath the surface to what could very well be squeezed margins on clearance sales. We saw promotional pricing play a major role in October's uptick, and it probably wasn't encouraging to see the merchandise inventory balloon from $3.36 billion to $3.75 billion in the 12-month period through the end of October.

Something's just not right at J.C. Penney, and not just because analysts see another quarterly loss during a reporting period that will find most of its peers soaking in profitability. 

"The market may be cheering the double-digit uptick in comps, but it's an incomplete story," I wrote last month. "Save your applause for when J.C. Penney has actually earned it."

Well, it still hasn't earned the applause. By reiterating its outlook for the quarter that ends this month, J.C. Penney is saying that it still sees positive comps for the entire quarter. But after kicking things off with a 10.1% surge in November, it's not much of a guarantee that December and January will be acceptable. 

Given the market's reaction to its incomplete holiday update, it's safe to say that what "pleases" J.C. Penney is not pleasing investors.