Earnings Preview: J.C. Penney

J.C. Penney Company (JCP) is expected to report Q2 earnings before market open Friday, Aug. 15, with a conference call scheduled for 9:30 am ET.

Guidance

Analysts are looking for a profit of 49c on revenue of $4.27B. The consensus range is 35c to 52c for EPS, and revenue of $4.2B to $4.32B, according to First Call.

Analyst Views

The retailer recently raised its Q2 EPS view to 50c to 52c from its previous forecast of 38c due to a better-than-expected sell-through of promotional priced items and cost cutting during the quarter. J.C. Penney announced same-store sales for the month of July were down 6.5% vs. consensus of down 5.8 and forecast August SSS down in the mid-single digits.

Adrianne Shapira, a Goldman Sachs analyst, noted that inventory realignment throughout the sector continues to proceed. She said inventory appears to be "realigning nicely against our expectations" and should benefit margins into the second half," also adding that J.C. Penney ended July with lower same-store inventories than 2007 levels.

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. To combat this, the retailer has already said it will open only 20 new or relocated stores in 2009, down from the 36 stores that will open in 2008.

Next event: J.C. Penney is expected to release its August sales on September 4.

Comments

[ChickenLips:]

I hope Penney's gets their act together. I really want to like them, but they keep doing the same dumb mistakes over and over that keep me from making big purchases at their stores. And I'm sure other customers are in the same boat.

They don't restock their apparel racks with popular sizes. A majority of their business is apparel sales, so this is unacceptable. Can't they use technology to their advantage like Walmart, to keep the shelves full? When product is available it sells. Lately, I have been shopping at other stores where I know my size will be on the shelf. I'm tired of getting disappointed.

Now I noticed that they cut back on air conditioning! It is like an oven when you walk into this store, the rest of the mall is ice cold, what's going on other than cutting expenses? It has been hot like this the past couple of times I have been there, so it's not a repair issue. Do they think their regular customers aren't going to notice? We got out of there as fast as we could and spent big dollars at Dillards (ice cold) instead.

Oh well, I hope they retain their other customers with their massive discounting on unavailable merchandise, and can keep their stock price afloat!

2008 Aug 13 12:27 PM

[MyHaberdasher:]

That is interesting that the AC was on hold. It seems like common sense to retailers that their first goal should be to make the customers want to buy and to do that they have to be comfortable.

My Best,

Jeff Collins
Professional Haberdasher
www.MyHaberdasher.com

2008 Aug 13 06:18 PM