Earnings Preview: J.C. Penney

Feb.23.12 | About: J.C. Penney (JCP)

J.C. Penney (NYSE:JCP) is expected to report Q4 earnings before the open on Friday, February 24, with a conference call scheduled for 9:30 am ET.


Analysts are looking for EPS of 68c on revenue of $5.5B. The consensus range is 62c-71c for EPS, and revenue of $5.42B-$5.56B, according to First Call. In January, J.C. Penney cut its Q4 adjusted EPS view to 65c-70c from $1.05-$1.15 and forecast same-store sales down slightly. The New York Post reported in January that the retailer started 2012 by slashing thousands of jobs, but Bloomberg said these were mostly seasonal positions. During the quarter, J.C. Penney announced a licensing deal with Martha Stewart Living Omnimedia (NYSE:MSO) and a partnership with Ellen DeGeneres. The company said at its analyst day that it will no longer report monthly SSS results, but guided FY12 adjusted EPS $1.59, consensus $1.21. The company said it expects to see stronger performance in 2H12. The retailer forecast FY12 CapEx $800M, with the majority spent enhancing store experiences. The company said it is also targeting $900M in expense cuts over two years.

Analyst Views

Piper Jaffray recently upgraded J.C. Penney citing expectations for annual earnings growth of 30%-plus over the next three-to-five years. Citigroup also raised its estimates and price target for J.C. Penney citing the company's upbeat financial guidance and transformation strategy. However, BMO Capital believes J.C. Penney's valuation reflects more improvement in sales and earnings than what is achievable and sees several fundamental headwinds.