Earnings Preview: J.C. Penney

| About: J.C. Penney (JCP)

J.C. Penney (NYSE:JCP) is expected to report Q2 earnings before the market open on Friday, August 10, with a conference call scheduled for 8:00 am ET.


Analysts are looking for EPS of (25c) on revenue of $3.2B. The consensus range is (49c)-9c for EPS, and revenue of $2.98B-$3.44B, according to First Call. After reporting lower than expected Q1 results, J.C. Penney discontinued its 20c per share quarterly dividend. The company said it no longer expected to meet FY12 GAAP EPS of $1.59, but reaffirmed its non-GAAP EPS view of $2.16. During the quarter, J.C. Penney said it would eliminate approximately 350 positions at its headquarters and announced a retail partnership with Joe Fresh. Nina Garcia, Marie Claire fashion director & Project Runway judge, visited J.C. Penney's headquarters tweeted that it's going to be a "game changer," but Credit Suisse analyst Michael Exstein said the retailer's stores "looked like a mess" during a recent visit. CEO Ron Johnson said he has seen his new pricing strategy hurt sales, adding that he would treat stores like a start-up, where "The only question is what size will the start-up be. We are going to get to the right level." In an interview with CNBC, Johnson said that the year has been "tougher" than expected, but was not concerned about liquidity. The Wall Street Journal also speculated that the company would implement steep price cuts across much of its merchandise.

Analyst Views

Cleveland Research said checks indicate July sales trends were weak and is increasingly cautious on 2H, while Deutsche Bank lowered its estimates and price target for J.C. Penney citing continued weak top-line trends. Analysts and investors will listen for comments on the company's strategies going forward, as well as for any insight into the upcoming back-to-school season.