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.

J. C. Penney Co. (NYSE: JCP): Q3 Earnings Preview 2010

J. C. Penney Co. (NYSE: JCP) is scheduled to report third quarter earnings before the opening bell on Friday, November 12, 2010. Analysts on average expect the company to report earnings of 17 cents per share on revenue of $4.25 billion. In the year ago period, the company reported earnings of 11 cents per share on revenue of $4.18 billion. 

J. C. Penney Company, Inc. operates a network of department stores in the United States, Alaska, and Puerto Rico. It primarily offers family apparel and footwear, accessories, fine and fashion jewelry, beauty products, and home furnishings. The company operates over 1,100 department stores throughout the United States and Puerto Rico. 

In the preceding second quarter, the Plano, Texas based company's net income was $14 million or 6 cents a share, compared to a loss of $1 million or break even per share in the prior-year quarter. On an adjusted basis, the company earned 20 cents per share in the latest quarter. Revenue slipped 0.1% to $3.94 billion. Analysts, on average, expected the company to report earnings of 5 cents per share on revenue of $4.02 billion. 

Early in November, the company reported third quarter comparable store sales increase of 1.9%, compared to decline of 4.6% last year. Total Company Sales were $4.19 billion, up from $4.18 billion a year ago. Last month, the company said that it continues to expect third quarter earnings to be in the range of $0.16 to $0.20 per share.

The company has managed to improve its performance through rigorous cost controls, inventory management and a strategic marketing plan. It is also benefiting from a recovery in consumer demand and economic stabilization.  However, the company is stilll facing a highly competitive promotional environment and ongoing volatility with regard to consumer discretionary spending.

By the end of fiscal 2014, the company expects total sales to increase over $5 billion to reach approximately $23 billion. This is expected to be driven primarily by comparable store sales growth. Gross margin is expected to increase to approximately 40 percent of sales, but total operating expenses should decline as a percent of sales, and operating income is expected to steadily increase over the period and be approximately 9 to 10 percent by 2014. After 2010, EPS growth, adjusted for the pension expense impact, is expected to achieve a 25 percent compounded annual growth rate over the following four year period to bring expected EPS for 2014 to over $5.00 per share.  The company’s cash flow is expected to increase from approximately $200 million in 2010 to $500 million in 2014. 

In October, Vornado Realty Trust (NYSE: VNO) filed a Schedule 13D with the Securities and Exchange Commission disclosing that through its subsidiaries it has acquired beneficial ownership of approximately 9.9% of the common stock of J.C. Penney Company, Inc. Also, William Ackman’s Pershing Square Capital Management LP disclosed a 16.5 percent stake in J.C. Penney. Meanwhile, J.C. Penney Co., Inc. adopted a a one-year poison pill to thwart any takeover attempt. 

Investors are expected to keenly follow the management's commentary about store traffic and the upcoming holiday season. The Friday after the Thanksgiving holiday marks the start of the crucial holiday shopping period.

In terms of stock performance, J. C. Penney shares have gained nearly 20% since the beginning of the year. 

Full Disclosure: None.