Retail

Short Interest in JC Penney Plummets 23 Million Shares

Douglas A. McIntyre

Published: March 25, 2016 9:10 am

Last Updated: January 13, 2020 11:33 am

The turnaround of a company’s share price, presumably based on a turnaround of its business, is never complete until the naysayers retreat. After the company posted Lazarus-like results for the holidays, the short interest in J.C. Penney Co. Inc. (NYSE: JCP) for the period that ended March 15 dropped 23 million shares, or 25%, to 71.1 million.

Short sellers have been trampled in the past month as the retailer’s shares have risen almost 14% to $11. The reason is plain enough. J.C. Penney announced particularly good fourth-quarter earnings, which included the critical holiday season. Two years ago, it was an open question whether J.C. Penney would be viable after the holiday period.

In the fourth quarter, same-store sales rose 4.1%. For that period, which ended January 30, revenue rose 2.6% to $4 billion. At its worst, three years ago, revenue was falling a 20% or faster clip. Adjusted EBITDA for the most recent quarter was $381 million, or 40% higher than for the same period a year ago.

J.C. Penney was supposed to be a victim of the move away from brick-and-mortar retail and toward e-commerce. Magnifying its problems, its poor results from both two and three years ago put it at a great disadvantage to other department store rivals, which included Macy’s Inc. (NYSE: M) and the Sears and Kmart divisions of Sears Holdings Corp. (NASDAQ: SHLD).

It turns out things did not turn out that way for J.C. Penney.