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JC Penney finds it difficult both with lenders and trading

By FashionUnited

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JC Penney's shares plunged Wednesday after

a report that CIT, the largest lender in the clothing industry, has reportedly stopped providing financial support to small and large suppliers selling to JC Penney stores by the time being. As the ‘New York Post’ reported Wednesday, CIT made the decision after meeting with JC Penney officials to examine the company's books.

Elsewhere, closed at rise, adding over 6.7 percent on Wednesday after the company reported second-quarter earnings climbed and topped analysts' estimates. "We achieved record profit margins and (earnings per share) in the second quarter with each business segment achieving improved profitability," said Chairman and Chief Executive Rich Noll. In fact, the apparel maker recorded higher sales and lower costs, boosting margins.

On the back of the better figures, Hanesbrands boosted its 2013 earnings guidance, now expecting per-share earnings between 3.50 and 3.65 dollars compared to its earlier outlook for 3.25 to 3.40 dollars a share. On the contrary, the retailer lowered its revenue outlook, waiting sales to come at circa 4.55 billion dollars compared to its prior forecast for about 4.6 billion dollars in revenue.

Analysts polled by Thomson Reuters were expecting earnings of 94 cents a share on revenue of 1.21 billion dollars. Gross margin went to 36.3 percent from 31.1 percent.

Shares of Hanesbrands rose 2.3 percent to 60.80 dollars in recent after-hours trading. Through Tuesday's close, the stock has risen 66 percent since the start of the year.

Elsewhere, the Jones Group on Wednesday reported a second-quarter loss, weighed down by one-time charges, while adjusted results beat expectations as its jeans sales improved.

The clothing and footwear company, which owns brands including Nine West, Jones New York, Anne Klein and Stuart Weitzman, said its loss for the three months ended June 30 totaled 3.3 million dollars, or 5 cents per share. That compares with net income of 7.9 million dollars, or 10 cents per share, last year. Excluding one-time items, net income totaled 2 cents per share, compared with 22 cents per share last year.

Adjusted results exclude impairment charges, severance costs and other restructuring costs. Analysts predicted a loss of 12 cents per share. Analyst estimates typically exclude one-time items.

"Second quarter revenues were in line with our expectations, with the Jeanswear segment registering the largest improvement in operating results, as those product lines continue to perform well. The International Wholesale segment also showed improved operating results, led by the Nine West and Stuart Weitzman international businesses. For other areas of the business, the weather impacted seasonal product sales, which generated higher promotional levels. As a result, second quarter gross margins were approximately 260 basis points below last year. We anticipate we will achieve improved performance in fall 2013 with our new and refocused sportswear product offerings," Wesley R. Card, The Jones Group Chief Executive Officer, commented on the results.

In Europe, both LVMH and Hermès slightly improved on Wednesday (0,06 percent and 0,04 percent respectively).

On a separate note, Aeropostale was upgraded by research analysts at Topeka Capital Markets from a ‘hold’ rating to a ‘buy’ rating in a report released on Tuesday, ‘TheFlyOnTheWall.com’ reported. The firm currently has a 18 dollars price target on the stock, up from their previous price target of 15 dollars. Topeka Capital Markets’ analysts highlighted that “After viewing ARO’s new back-to-school floor set as it dramatically ‘re-branded’ its stores on 7/29, we are upgrading the shares from Hold to Buy and raising our price target from 15 to 18 dollars. We were impressed with the fashion we saw and believe a greater ability to offer head- to-toe fashion can garner a bigger share of wallet from its teen customers even as it remains the lowest priced of the three A’s.”


FashionUnited