New York City A J.P. Morgan analyst said Tuesday that Plano, Texas-based J.C. Penney’s margins were likely pressured as it increased markdowns and clearance sales during the past few months, as the analyst lowered his fourth-quarter estimate on the company.
J.P. Morgan's Charles Grom wrote in a note to investors that the company offered free Internet shipping, deep discounts during its after-Christmas sale and "aggressive" store coupons and doorbusters, especially in December.
While J.C. Penney's activity probably successfully cleared out its inventory, Grom said, the company's margins were likely hurt.
Also, the company's increased pension expense will hurt selling, general and administrative expenses in 2009, Grom said.
Based on these two factors, Grom lowered his fourth-quarter estimate for the company.
"We remain cautious on the stock and reiterate our 'Neutral' rating," he wrote.