Earnings Preview: J.C. Penney Company

J.C. Penney Company (JCP) is expected to report Q3 earnings before market open Friday, November 14, with a conference call scheduled for 9:30 am ET.

Guidance

Analysts are looking for a profit of 53c on revenue of $4.39B. The consensus range is 51c to 56c for EPS, and revenue of $4.29B to $4.63B, according to First Call. On October 8, the retailer reported September same-store sales declined 12.4% due to further weakening of the economic climate. As a result of falling consumer confidence and a decline in mall traffic, the company forecast Q3 SSS down in the low double digits. On November 6, J.C. Penney reported October SSS down 13% and narrowed its Q3 EPS view to 51c to 53c from the prior view of 50c to 60c.

In recent months, shares have been hurt by rising fuel and food costs, the credit crunch and weak dollar. Instead of spending at department stores, consumers are flocking to wholesale clubs and discount apparel chains. In order to combat this and attract customers for the upcoming critical holiday season, the company is holding "The Biggest Sale of Them All," which has items marked as much as 60% off.

Analyst Views

Barclays analyst Robert Drbul wrote in a research note that high employment, inflation and the housing market could add additional pressure to U.S. consumers going into the holiday season. Additionally, he is concerned about the ability of department stores to generate revenue growth next year. Investors and analysts will listen for comments from the company on their outlook for the future, though many believe this is likely to be one of the weakest holiday shopping seasons in recent history.