After markets close on Tuesday, J.C. Penney Co. Inc. (NYSE: JCP) is scheduled to report third-quarter results. The company gave us a preview of what to expect when it announced cuts to guidance in early October.

The consensus third-quarter estimates from Thomson Reuters call for an earnings per share loss of $0.80 on revenues of $2.81 billion. At the time of the October announcement, analysts had cut J.C. Penney’s estimated third-quarter loss from $0.84 to $0.75, but the lowered guidance had an immediate impact on the estimate.

J.C. Penney has also announced that a new CEO will replace Myron Ullman next August. Marvin Ellison joined J.C. Penney’s board of directors on November 1. Ullman will serve as executive chairman for one year following Ellison’s ascension to the CEO post.

Not only did J.C. Penney admit to slow sales in September, but the company also said that clearance pricing could not be overcome by full-price sales. That implies margins evaporated and losses grew.

J.C. Penney tried going upscale somewhat when it hired former CEO Ron Johnson a few years ago. When that change of direction seemed clearly doomed to failure, the company brought back Ullman, who had been CEO before Johnson. Sale pricing and discounts came back and the bleeding has slowed, but it is far from stopped. It won’t stop in the third quarter, and the fourth quarter could fizzle as well.

J.C. Penney is expected to post 3% same-store sales growth in the third quarter, which is a critical number to investors. Same-store sales dropped by 26% between 2011 and 2012 and almost 5% between 2012 and last year. The bar could not be set any lower.

Right now analysts are looking for earnings per share of $0.13 in the fourth quarter on revenues of $3.88 billion and same-store sales growth of 3%.

If J.C. Penney misses third-quarter estimates or says anything that would lead investors to believe that the fourth-quarter numbers are in danger, shares could fall off a cliff in Tuesday’s after-hours session. How big a cliff? This past weekend, Barron’s said that missing projected sales growth could chop the share price by 35%.

In late morning trading Wednesday, J.C. Penney shares were up more than 3%, at $7.43 in a 52-week range of $4.90 to $11.30. The consensus price target on the stock is $8.61. Recent analysts rating on the stock from UBS and Maxim downgraded the shares from Neutral or Hold to Sell.

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