Not a Great Holiday for JC Penney - Analyst Blog
10 January 2012 - 7:30PM
Zacks
Surely, it was not a great holiday
for J. C. Penney Company Inc. (JCP), a leading
retailer of apparel and footwear, accessories, fashion jewelry,
beauty products and home furnishings, as the company failed to
utilize the busiest shopping season of the year.
The company witnessed a mere 0.3%
increase in comparable store sales during the five-week period
ended December 31, 2011compared with an increase of 3.7% in the
prior-year period.
During the period under review, The
Plano, Texas-based J. C. Penney registered comparable-store sales
growth across women's accessories and children’s attire. However,
total sales inched down 2.3% year over year to $2,886 million
during the reported period.
The company’s comparable-store
sales for the forty-eight week period inched up 0.7%. However,
total sales dropped 2.4% to $16,459 million.
J. C. Penney has experienced a
continuous fall in its comparable-store sales for the last four
months prior to December 2011. Comps declined 1.9% in August, 0.6%
in September, 2.6% in October and 2% in November.
Moreover, situation is more or less
same for monthly sales data, which has been falling persistently –
4.5% in August, 3.6% in September, 6.6% in October and 5.9% in
November.
Further, the scenario is gradually
becoming worse for the company as retailers such as Macy’s
Inc. (M), Saks Incorporated
(SKS), Ross Stores Inc. (ROST) and
Limited Brands Inc. (LTD) posted healthy
December comparable-store sales growth of 6.2%, 5.8%, 9% and 7%,
respectively.
Drop in
Guidance
Considering its soft sales results
and higher markdowns, J. P. Penney trimmed its earlier sales and
earnings forecast for the fourth quarter of 2011. The company now
expects comparable store sales to be down marginally compared with
the prior-year period and forecasts adjusted EPS in the range of
$0.65 to $0.70 per share.
Earlier, J. C. Penney forecasted
comparable store sales to remain flat to up slightly and earnings
between $1.05 and $1.15 per share for the fourth quarter of
2011.
Amid the gloom, J. C. Penney is
trying every means to return back to its growth trajectory. The
company's ongoing efforts to manage expenses and optimize
operations, while continuing to invest in the opening of additional
Sephora inside J.C. Penney beauty boutiques and the launching of
new businesses under its Growth Brands Division is expected to
generate incremental profits in the upcoming quarters.
Currently, J. C. Penney retains a
Zacks #3 Rank, which translates into a short-term “Hold” rating.
Moreover, considering the company’s fundamentals, we have a
long-term 'Neutral' recommendation.
PENNEY (JC) INC (JCP): Free Stock Analysis Report
LIMITED BRANDS (LTD): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis Report
SAKS INC (SKS): Free Stock Analysis Report
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