JC Penney, Best Buy: Symbols of US recovery?
Recapping the day's news and newsmakers through the lens of CNBC.
J.C. Penney: America's uncertain retailer recovery
It's Wal-Mart that's supposed to represent the American consumer economy, and Wal-Mart that disappointed this quarter, among many other retailers.
What's good to say about J.C. Penney? With its board battles and lackluster results, call it the problem child of retailing. Well, the woes are still immense, but analysts and investors did find a ray of hope in Tuesday's quarterly report, which showed an improvement in sales from the previous quarter. Though earnings were down, the results heartened investors.
Same-store sales fell nearly 12 percent, but that looked good next to the 16.6 percent drop in the previous quarter. The hedge fund Hayman Capital and billionaire George Soros are betting on a turnaround.
"We're facing headwinds of declining mall traffic. We know where the problems are, how to address them and have the plans in place."—J.C. Penney CEO Mike Ullman
"The [J.C. Penney's] debt, we think, is a great way to play the bet on J.C. Penney's turnaround."—Kyle Bass, founder of Hayman Capital
Cost cutting boosts Best Buy, but can it continue?
With all eyes on the consumer as the bellwether for the economy, Best Buy joined J.C. Penney as turnaround retail stories that heartened investors.
Cost cutting was a big factor, though, and it's not clear how much more can be done. CEO Hubert Joly, who took over last fall, has cut jobs, made management leaner and closed underperforming stores. And it's starting to look like the store-within-a-store concept will pay off. Investors may be a tad too enthusiastic, though.
"Just a year ago the company was left for dead. ... I think they've done a great job to this point, but I think a lot of what they've cut is the low-hanging fruit. ... Now it gets a lot harder."—R.J. Hottovy, senior retail analyst at Morningstar
Home Depot's solid foundation
Improvements in the housing market boosted results at Home Depot. Comparable-store sales were especially impressive, up more than 11 percent in the U.S. And the best may be yet to come if Wall Street optimists are on target.
"I still view Home Depot shares as inexpensive. I think if we're having this conversation two years from now, we're going to be talking about a much higher level of earnings for Home Depot as they continue to recover."—Brian Nagel, senior equity research analyst at Oppenheimer & Co.
Unemployment: Where's it falling fastest?
Yes, the job market is improving, but as you'd expect, it's doing better in some places than others. In fact, unemployment has recently gone up in more than half of the states. Southern and Western states are showing some of the fastest drops in unemployment rates, though their rates are still high. Experts credit manufacturing growth.
"Some of the old, long-standing comparative advantages are re-emerging as drivers of growth."—Moody's Analytics analyst Steve Cochrane
Labor Day picture best in years
It's not just J.C. Penney and Best Buy investors showing confidence. Happy consumers like to go places and spend money. At least, that's what AAA says to explain its latest Labor Day travel survey, which shows more Americans plan to travel on the long holiday weekend this year than on any since September 2008. AAA credits economic improvements.
"As home prices improve in many parts of the country, more families are feeling comfortable about traveling this Labor Day holiday."—AAA President and CEO Robert Darbelnet