JCPenney has a 'tough path forward'

JCPenney stock plummeted nearly 8% Monday morning after a UBS note sent out to clients noted the company has a "tough path forward."

The report comes on the heels of JCPenney's lackluster first quarter earnings report released Friday morning.


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The department store reported that same-store sales fell 3.5% versus a year ago. Earnings per share slumped $0.26 from last year.

The weak Q1 results have some Wall Streeters concerned that the retailer may not have the wherewithal to fend off the ongoing retail Apocalypse.

"After a big 1Q SSS shortfall (-3.5% vs our -0.5%), JCP needs 2-yr SSS to accelerate by +3.7-6.3pp in 2Q-4Q to hit its guide for -1% to +1% SSS for the year," wrote the UBS team led by Michael Binetti.

The bank has lowered its price target for JCPenney to $4 per share, below its original 12-month price target of $5. Currently, the stock trades at $4.31 per share.

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Struggling department stores of 2016
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Struggling department stores of 2016
TORONTO, ONTARIO, CANADA - 2016/03/08: Sears store entrance, is an American chain of department stores. Known for selling high quality clothing article from shoes to shirts. (Photo by Roberto Machado Noa/LightRocket via Getty Images)
Macy's Inc. signage is displayed at a department store in New York, U.S., on Monday, Feb. 22, 2016. Macy's Inc., the largest U.S. department-store company, is scheduled to report fourth-quarter 2015 earnings before the opening of U.S. financial markets on February 23. Photographer: Michael Nagle/Bloomberg via Getty Images
J.C. Penney Co. signage is displayed outside of a store at the Gateway Shopping Center in the Brooklyn borough of New York, U.S., on Saturday, Aug. 8, 2015. J.C. Penney Co. is scheduled to release earnings figures on Aug. 14. Photographer: Michael Nagle/Bloomberg via Getty Images
UNITED STATES - JUNE 09: Customers enter the Dillards department store at Parkdale Mall, in Beaumont, Texas, Wednesday morning, June 9, 2004. A judge declared a mistrial in a lawsuit brought against Dillard's Inc. by 17 black shoppers in Texas who claimed that security guards at the department store chain harassed them because of their race. (Photo by Scott Eslinger/Bloomberg via Getty Images)
MIAMI, FL - APRIL 19: A Nordstrom sign is seen outside a store on April 19, 2016 in Miami, Florida. Nordstrom on Monday said in a cost-cutting measure they are expecting to lay off 350 to 400 people. (Photo by Joe Raedle/Getty Images)
The sign outside the Kmart store is seen in Broomfield, Colorado November 19, 2009. Sears Holdings Corp posted a narrower-than-expected quarterly loss November 19, 2009, helped by the first increase in same-store sales at its Kmart unit in four years. REUTERS/Rick Wilking (UNITED STATES BUSINESS)

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