Thursday, February 24, 2011

J. C. Penney Company Inc. (NYSE: JCP): Q4 Earnings Preview 2010

J. C. Penney Company Inc. (NYSE: JCP) is scheduled to release its fourth-quarter earnings before the opening bell on Friday, February 25, 2011. Analysts, on average, expect the company to report earnings of $1.08 per share on revenue of $5.70 billion. In the year ago period, the company reported earnings of 84 cents cents per share on revenue of $5.55 billion.

J. C. Penney Company, Inc., through its subsidiary, J. C. Penney Corporation, Inc., operates a network of department stores in the United States and Puerto Rico. 

In the preceding third quarter, the Plano, Texas-based company's net income was $44 million, or 19 cents per share, compared with a profit of $27 million, or 11 cents per share, in year-ago quarter. On an adjusted basis, the company earned 34 cents per share in the latest quarter. Revenue increased slightly to $4.2 billion from $4.18 billion. Analysts, on average, expected the company to report earnings of 17 cents per share on revenue of $4.25 billion. 

The company reported a drop in January sales, but said the strength of November and December results, together with lower expenses, will result in better-than-expected fourth-quarter profits. For the fourth quarter of fiscal 2010, the company reported comparable store sales of 4.5%, ahead of its guidance of a 3–4% rise, and sales growth of 2.8% to $5,703 million. Early in January, the company also lifted its fourth quarter earnings guidance, citing better than expected overall sales performance during the quarter, coupled with gross margin performance that was in-line with expectations and rigorous expense management that resulted in expenses being well-leveraged against sales. The company said that it now expects fourth quarter earnings to be in the range of $1.06 to $1.09 per share, including the previously announced one-time restructuring charges of approximately $0.08 per share. The company had previously provided guidance for fourth quarter earnings in the range of $0.90 to $1.00 per share.

JCPenney's fundamental picture remains encouraging. JCPenney has adroitly adjusted to the U.S.'s frugal consumer era. The retailer has effectively aligned product quality/style with its target demographic, and also prudently and tactfully invested in new brands. Penney said last month that it will close 5 unprofitable department stores and a Penney Home store. It’s also closing 19 catalog outlet stores and one furniture outlet as it phases out its catalog business and matches up online and store merchandise. The moves are intended boost profitability and keep pace with customers' increasing shift to online purchases. J.C. Penney will take the streamlining actions through 2011 and expects them to have a positive impact on earnings in 2012.

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