Dive Summary:
- An unplanned markdown by JC Penney in early December cut deeply into gross margins and ultimate earnings potential for the holiday season.
- Sears, despite picking up apparel sales from JC Penney, also showed disappointing sales for the fourth quarter.
- With the fourth quarter being when companies make a significant portion of their profits, the lack of progress from JC Penney and Sears does not bode well with the markets.
From the article:
...Similarly Sears Holding has indicated that the fourth quarter sales were disappointing with sales dropping and earnings are also likely to be below last year. This happened despite the fact that Sears stores are picking up some apparel sales from J.C.Penney stores
Let’s face it, retailers started to take markdowns as early as December 10, when JCPenney started slashing prices. This was not planned. As soon as a retailer starts to take unplanned markdowns it is cutting into gross margins and thus its ultimate earnings potential..."
