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Retail Wreckage Continues With J.C. Penney Report, Dragging Nordstrom Lower

Shares of J.C. Penney (JCP) added to the retail wreckage of the last few days after reporting a larger than expected loss for the latest quarter, adding to concerns about the broader sector following disappointing reports yesterday from peers Macy's (M) and Kohl's (KSS). Separately, higher-end peer Nordstrom (JWN) bucked the trend of declining sales in the sector, reporting a comparable store sales gain for its latest quarter and raising guidance. While Nordstrom shares briefly went into the green, they declined following the market open as the sector gives back some of the gains seen in the run-up to this week's reports.

J.C. PENNEY: J.C. Penney reported an adjusted loss per share for the second quarter of (9c), compared to forecasts for a (5c) loss. Comp sales slid 1.3%, falling below the retailer's fiscal year guidance. The comp sales decline for the quarter resulted in a positive two-year stack of 0.9%, the company said. Despite misses on the EPS and comp sales lines, revenue of $2.96B beat forecasts of $2.84B. CEO Marvin Ellison said that while the broader retail sector "remains challenged," all categories delivered improved sales results during the quarter, with beauty, home refresh and omnichannel continuing to deliver positive sales growth. On the company's earnings call, Ellison said there was greater margin and EPS dilution than expected during the quarter following the liquidation of inventory in 127 closing stores, but said he believes this was "isolated" to Q2. Looking ahead, J.C. Penney backed its guidance for fiscal 2017 adjusted EPS of 40c-65c and SSS down 1%-up 1% and said it expects improved...