Can JC Penney Turn Itself Around With Earnings?
J.C. Penney is scheduled to report its fiscal second-quarter financial results Friday before the markets open.
J.C. Penney Co. Inc. (NYSE: JCP) is scheduled to report its fiscal second-quarter financial results Friday before the markets open. Consensus estimates from Thomson Reuters call for a net loss of $0.48 per share on $2.86 billion in revenue. In the same period of the previous year, the struggling retailer posted a net loss of $75 per share and revenue of $2.80 billion.
Management has spent the past several quarters promoting a recovery that began after the end of the tenure of former Apple Retail Chief Ron Johnson. His replacement was Mike Ullman III, who has posted a very modest recovery from the disaster under Johnson, when sales fell as much as 20% per quarter. The price of the company’s stock is the critical measure of whether a recovery is real. It has dropped from $42 in February 2012 to just above $8 recently.
The reason the stock continues to be depressed is that the recovery has been no recovery at all. In the quarter that ended May 2, revenue rose only 2% to $2.86 billion. J.C. Penney lost $167 million. Granted, that was better than the $352 million lost in the same period the year before. Same-store sales were up 3.4%, which does very little to fill the hole Johnson created.
History shows how far J.C. Penney has to go. Revenue was over $17 billion in both the 2011 and 2012 fiscal years. The number dropped to $13 billion in 2013 and $11.9 billion in 2014. Fiscal 2015 was a modest recovery to $12.3 billion. Even if same-store sales improvements are 5%, it means it will take years for J.C. Penney to return to its former size.
A few analysts weighed in on J.C. Penney prior to the release of the earnings report:
- Evercore ISI upgraded the stock to a Hold rating from Sell.
- Piper Jaffray reiterated a Buy rating with a $15 price target.
- Oppenheimer reiterated a Hold rating.
So far on the year, the company has actually outperformed the market, despite its relatively flat revenues. Shares were up nearly 28% year to date, but they were down about 13% over the past 52 weeks.
Shares of J.C. Penney were down 0.5% at $8.23 Thursday afternoon. The stock has a consensus analyst price target of $8.89 and a 52-week trading range of $5.90 to $11.30.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
