J.C. Penney looks for traction


Channel checks from Deutsche Bank indicate J.C. Penney (JCP -2.5%) offered deeper discounts on its Mother's Day promotions this year than last.

The read raises some concerns inventory backlog could be an issue at the company coming off of slow winter traffic.

What to watch: JCP reports earning tomorrow with analysts forecasting a $1.25 per share loss on $2.71B in sales. Citi thinks comp sales growth will come in at 3% to 5% for the quarter. Guidance for Q2-Q3 comp growth of over 7% could give shares a lift. Q&A during the firm's earnings call on current inventory could also be a factor.

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Comments (10)
  • EnerSavr
    , contributor
    Comments (588) | Send Message
     
    I think they will be closer to $3B in sales with a less than $1.20 loss PS. The gross margin will also be an issue and it should be 32-34%. The comp sales growth should be closer to 5% and if they can forecast a 7% CSG the the stock will be above $10 and maybe $11.
    14 May 2014, 03:09 PM Reply Like
  • loudano
    , contributor
    Comments (718) | Send Message
     
    What ever happened to the reports of imminent bankruptcy and a dire need for additional funding?
    14 May 2014, 06:35 PM Reply Like
  • Elephant Analytics
    , contributor
    Comments (1491) | Send Message
     
    I wrote an article in January that J.C. Penney would do +4% to +5% in 2014 and end up with $800 million in liquidity in Q3, resulting in an equity offering to boost liquidity.

     

    Instead J.C. Penney gave guidance for around +4% to +6% (mid-single-digits) and guidance for $1+ billion liquidity in Q3 by including potential utilization of $400 million in extra debt capacity.

     

    Not sure how that is all that much better than my scenario. Maybe slightly better growth and tacking on even more debt rather than doing an equity offering.
    15 May 2014, 12:13 AM Reply Like
  • Trampoline
    , contributor
    Comments (148) | Send Message
     
    Wheres Memshu?
    16 May 2014, 12:35 AM Reply Like
  • Steponit
    , contributor
    Comments (251) | Send Message
     
    Well as the saying goes,"It isn't over till it's over", holds true with this company as well as all others. The rest is noise in the system, who or what anyone believes generally depends on if you are short or long and for how long.
    Look at the big picture, the entire economy is in slow motion. The market is in classic rotation looking for a reason to correct.
    14 May 2014, 09:38 PM Reply Like
  • Chazthespaz
    , contributor
    Comments (14) | Send Message
     
    It was a tough winter and retail is off overall. I think JCP is doing the right things and will ook better as the year goes on, but I don't expect Q1 to look rosy.
    15 May 2014, 12:06 AM Reply Like
  • Chazthespaz
    , contributor
    Comments (14) | Send Message
     
    It was a tough winter, and sales are reportedly off overall. I think JCP is doing the right things, but I don't look for Q1 to be stellar. I think they should do better as the year goes along and the economy and housing gradually improves.
    15 May 2014, 12:08 AM Reply Like
  • EnerSavr
    , contributor
    Comments (588) | Send Message
     
    I agree that it was a tough winter and I do not expect rosy results, but I do not think that JCP's comparison to other department stores at this point is quite the right approach. They should be getting a lot of customers back and that is why I think the top line will be higher. Remember their top line was over $4B per quarter before RJ hit. I do not expect it to come back at once, but I do think it would happen by year's end based on what they are doing to fix it. By the way, that is not really rosy, it is just getting back to the older days.

     

    We will all know in a few hours, but it looks like the bears have managed to scare off a lot of people prior to the results.
    15 May 2014, 11:20 AM Reply Like
  • Fast Lane
    , contributor
    Comments (871) | Send Message
     
    is there really a change that JCP could swing up $1.80 to break $10 in the next 24 hours...?? Optimistic, yikes.
    15 May 2014, 02:09 PM Reply Like
  • EnerSavr
    , contributor
    Comments (588) | Send Message
     
    I guess I was wrong. They did even better than I thought. I think the JCP team is doing a great job and they are not forgetting that it is all about the customer, if you do not have customers nothing else matters.
    I did not think that they could restructure their debt this quick, but debt is not much of an issue if you can show growth, profitability, or a clear path to profitability.
    I think they have shown a clear path to reach profitability, control costs, and increase margins.
    Now the analysts are going to come out the wood work to raise guidance, but hindsight is 20/20.
    16 May 2014, 08:22 AM Reply Like
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