Department store operator JC Penney Co. Inc. (JCP) is slated to release its third-quarter earnings results before the market opens Friday.
The Plano, Texas-based company expects third-quarter earnings between $0.10 and $0.11 per share, including a charge of about $0.03 per share, primarily related to non-recurring real estate impairments, which was revised recently from its previous projection of $0.03 to $0.10 per share.
While announcing the September monthly sales, the company had lifted its quarterly earnings forecast from its initial forecast in the range of a loss of $0.05 to earnings of $0.05 per share, citing better than expected gross margin improvement during the first two months of the quarter.
In the same quarter a year ago, JC Penney had reported net income of $124 million or $0.56 per share, and income from continuing operations of $123 million or $0.55 per share.
On average, 12 analysts surveyed by Thomson Reuters currently expect the company to report earnings of $0.11 per share for the quarter, with estimates ranging between $0.10 and $0.15 per share. Analysts' estimates typically exclude special items.
On November 5, JC Penney reported a 3.2% decline in total sales to $4.18 billion for the third quarter from last year's sales of $4.32 billion. Analysts also projected sales of $4.18 billion for the quarter. Comparable store sales for the thirteen weeks declined 4.6%, compared to a 10.1% decline in the same period of the prior year. JC Penney was looking for a total sales decline of 3% to 5%, and comparable store sales were anticipated to be down by 5% to 7%.
For the month of October, department store operators posted mixed same-store results as consumers continued to exercise restraint amid job losses and an unemployment rate that is close to 10%. October is not a typically strong sales period for retailers being a transitional month between the two largest selling seasons of the year: back-to-school and Christmas. U.S. retailers use the month to clear out fall merchandise and make room for holiday floor sets. The retail industry posted a 4.1% decline in same store sales for the month of October 2008.
JC Penney reported a 4.5% decline in comparable store sales for the month of October that was better than its guidance of a decrease of 5% to 8%. This compares to a 13% decline in same store sales last year. The company also reported a 3.5% decline in total company sales to $1.31 billion. In the month of September, the company's comparable store sales dropped 1.4%, and its total sales edged down 0.6% to $1.44 billion. In August, comparable store sales were down 7.9%, and total sales decreased 5.6% to $1.43 billion.
For the month of November, the four-week period ending November 28, 2009, comparable store sales is projected to decline 4% to 7%, compared to an 11.9% decrease in last year's November period.
Founded in 1902, JC Penney, through its subsidiary, J.C. Penney Corp., Inc., primarily offers family apparel and footwear, accessories, fine and fashion jewelry, beauty products, and home furnishings through a network of department stores. The company sells merchandise and services to consumers through its department stores and Internet/catalog channels. As of November 5, JC Penney operates 1,109 department stores throughout the United States and Puerto Rico, as well as one of the largest apparel and home furnishing sites on the Internet, jcp.com, and the nation's largest general merchandise catalog business. The company employees approximately 150,000 Associates.
In its preceding second quarter, JC Penney had reported a net loss of $1 million or $0.00 per share, compared to net income of $117 million or $0.52 per share last year, hurt by pension plan expenses as well as 7.9% decline in sales to $3.94 billion on lower consumer demand amid the economic downturn. Comparable store sales dropped 9.5%, compared to a decline of 4.3% in the year-ago quarter.
While announcing the second-quarter results, Chairman and chief executive officer, Myron Ullman, III said, "JCPenney's financial performance in the second quarter shows that our strategy to navigate the current, very difficult consumer climate is working and will continue to position us well over the near and longer term."
Back in May, J.C. Penney had said that it continues to anticipate a challenging consumer environment over the remainder of 2009.
Among other department stores chains, Menomonee Falls, Wisconsin-based Kohl's Corp. (KSS) Thursday posted higher profit for the third quarter, driven by inventory management and expansion of exclusive brands. The company's third-quarter net income was $193 million or $0.63 per share, compared to $160 million or $0.52 per share last year. Quarterly net sales totaled $4.05 billion, 6.5% higher than the previous year's $3.80 billion, and comparable store sales rose 2.4%.
Cincinnati, Ohio-based department stores operator Macy's, Inc. (M) reported Wednesday a narrower loss for the third quarter, reflecting strong sales at Bloomingdale's and "outstanding growth" in its Internet businesses. The company's third-quarter net loss was $35 million or $0.08 per share, compared to prior year's loss of $44 million or $0.10 per share. Excluding restructuring costs, the loss was $0.03 per share compared to a loss of $0.08 last year. Quarterly net sales declined 3.9% to $5.28 billion from $5.49 billion in the previous year, with a 3.6% decline in same-store sales.
In mid-August, JC Penney raised its fiscal 2009 forecast, citing better-than-expected second quarter operating results and expectations for further gross margin improvement in the second half. The company now expects earnings for the full year in a range of $0.75 to $0.90 per share, compared to previous guidance range of $0.50 to $0.65 per share. Total sales is now projected to decrease about 5.5% to 6.0%, and comparable store sales are now anticipated to decrease about 7.0% to 7.5%, while previous projection was total sales to drop between 7% and 10%, and comparable store sales to fall 9%.
In the year 2008, the company had recorded net income of $572 million or $2.57 per share and income from continuing operations of $567 million or $2.54 per share, on total net sales of $18.49 billion.
Wall Street is currently looking for earnings of $1.05 per share for fiscal 2009, with estimates ranging between $0.93 and $1.15 per share, while revenues are estimated to be $17.63 billion, representing a 4.6% drop from last year.
Peer Kohl's expects fiscal 2009 earnings to be in the range of $2.98 to $3.08 per share, which was raised from previous forecast of $2.59 to $2.70 per share, while analysts expect earnings of $3.02 per share.
Macy's fiscal 2009 same-store sales are now expected to be down between 5.4% and 5.7%, better than the company's original guidance of down 6% to 8% provided at the beginning of the year.
JCP closed Thursday's regular trading session at $29.39, down $0.48 or 1.61%, on a volume of 6.09 million shares. In the past 52 weeks shares have been trading in a broad range of $13.71 to $37.21, with a 3-month average volume of 4.93 million shares.
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