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Last Update: 14-Nov-11 09:55 ET
J.C. Penney Reports In-line Quarter; Guides Fourth Quarter Below Consensus
J.C. Penney (JCP $33.99 +0.07) reported third quarter earnings of $0.11 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $0.11.
Revenues fell 4.8% year/year to $3.99 billion versus the $4.07 billion consensus (sales were preannounced with Oct comps).
For the fourth quarter, the company expects earnings to be $1.05 to $1.15 versus $1.18 Capital IQ Consensus Estimate, with total sales ~250-300 bps less than comps sales guidance (flat to up slightly year/year), due to the impact of the company's exit from its catalog and catalog outlet businesses -- consensus calls for 1.5% YoY decrease in total sales; with a gross margin rate: expected to be down modestly when compared to last year.
This guidance does not include the financial impact that is expected to be incurred in the fourth quarter as the Company executes changes to its pricing strategy in preparation for the spring 2012 season.
"While our more affluent customers continued to respond well to J.C. Penney's attractions, the moderate customer continues to have limited discretionary spending capability, and that was apparent during the quarter. However, the combination of customer response to the style and value we offer in categories such as women's and men's apparel and accessories, coupled with the expense reduction initiatives we put in place over the course of 2011, allowed us to report results in line with our expectations."
Gross margin decreased $146 million compared to last year's third quarter. As a percent of sales, gross margin decreased ~160 bps to 37.4%, reflecting the softer-than-anticipated selling environment in the quarter and the resulting higher level of promotional activity.
Revenues fell 4.8% year/year to $3.99 billion versus the $4.07 billion consensus (sales were preannounced with Oct comps).
For the fourth quarter, the company expects earnings to be $1.05 to $1.15 versus $1.18 Capital IQ Consensus Estimate, with total sales ~250-300 bps less than comps sales guidance (flat to up slightly year/year), due to the impact of the company's exit from its catalog and catalog outlet businesses -- consensus calls for 1.5% YoY decrease in total sales; with a gross margin rate: expected to be down modestly when compared to last year.
This guidance does not include the financial impact that is expected to be incurred in the fourth quarter as the Company executes changes to its pricing strategy in preparation for the spring 2012 season.
"While our more affluent customers continued to respond well to J.C. Penney's attractions, the moderate customer continues to have limited discretionary spending capability, and that was apparent during the quarter. However, the combination of customer response to the style and value we offer in categories such as women's and men's apparel and accessories, coupled with the expense reduction initiatives we put in place over the course of 2011, allowed us to report results in line with our expectations."
Gross margin decreased $146 million compared to last year's third quarter. As a percent of sales, gross margin decreased ~160 bps to 37.4%, reflecting the softer-than-anticipated selling environment in the quarter and the resulting higher level of promotional activity.
