Friday, May 13, 2011

J. C. Penney Co. Inc. (NYSE: JCP): Q1 Earnings Preview 2011

J. C. Penney Company Inc. (NYSE: JCP) is scheduled to release its first-quarter earnings before the opening bell on Monday, May 16, 2011. Analysts, on average, expect the company to report earnings of 25 cents per share on revenue of $3.95 billion. In the year ago period, the company reported earnings of 25 cents cents per share on revenue of $3.93 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 fourth quarter, the Plano, Texas-based company's net income was $271 million, or $1.13 per share, compared to $200 million, or 84 cents per share, in the year-earlier quarter. On an adjusted basis, the company earned $1.23 per share in the fourth quarter. Revenue increased 2.8 percent to $5.70 billion from $5.55 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $1.08 per share on revenue of $5.70 billion.

J. C. Penney has also benefited from the ongoing success of the strategic initiatives taken by the company, including Call it Spring by The ALDO, Liz Claiborne and Claiborne Group coupled with the value offered by its power private brands.

Recently, the company lifted its first-quarter earnings outlook. The company now anticipated earnings to be about 24 cents per share, including previously announced non-comparable items. The company had previously expected earnings to be in the range of 18 cents to 23 cents per share.

J. C. Penney's well diversified supplier base, compelling private and national brands, marketing campaigns, point-of-sale technology initiatives as well as effective cost and inventory management should bode well for sales and margin trends over the long term. The company also remains on track to deliver comparable-store sales growth and boost its market share.

Moreover, the in-store Sephora departments continue to attract younger and more affluent customers. Theseare part of J. C. Penney's strategy to gain competitive advantage over the drug stores, which gave their cosmetic sections facelifts in the recent years. The Sephora concept instigates confidence and is expected to be a significant revenue driver.

The department store operator has been focusing on remodeling, renovating and refurbishing of its stores in order to create a soothing shopping experience for the consumers. Therefore, it also refreshes its website functionality, keeping in mind continued migration to online shopping.

The company is encouraging online shopping and aiming to make its website accessible in stores. It's also trimming costs by closing underperforming stores, winding down its catalog and consolidating its call centers. Activist investors Bill Ackman and Steven Roth, who both joined Penney's board in February, are helping drive some of the changes.

Full Disclosure: None.
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