(By Nikki) J.C. Penney Company (JCP), Inc, one of the leading retailers in the US, is scheduled to report Q4 2009 on Friday, February 19, 2010. In the last two quarters ended October 2009, the company disappointed investors by reporting lower earnings than the analysts' consensus estimates. However, in April, and Jan quarters, the company's earnings were above the analysts' consensus estimates.
JC Penney is the principal subsidiary of JC Penney Company. The company offers a range of national and private label brands in various product categories including apparel, home furnishing, accessories and shoes. JC Penny generates revenue by selling its merchandise through department stores and direct channels. Both the department store and direct channel offer a similar merchandise mix. In addition, JC Penney's department stores accept returns from sales made via the Internet and catalogs. In addition, the company markets an array of apparel and home furnishing collection through its internet site, www.jcp.com. JC Penney also operates the largest general merchandise catalog business in the US. JC Penney generates revenues through eight merchandise groups: women's, home, men's apparel and accessories, children's apparel, women's accessories, family footwear, fine jewelry, services and other.
Total sales in the third quarter decreased 3.2% compared to last year, while comparable store sales decreased 4.6%. Yet, third quarter results that were significantly better than initial expectations and showed further improvement in cash flow performance, reflecting the continued successful execution of its Bridge Plan strategy. The strongest merchandise results were in shoes and women's apparel, and geographically, the best performance was in the southwest region of the country. The weakest results were in fine jewelry and in the northwest region. The company continues to be in a strong financial position, ending the quarter with a cash and cash equivalents balance of $2.1 billion. Based on the company's better than expected year to date operating performance, as well as expectations for the fourth quarter, management raised its full year guidance for both comparable store sales and earnings per share.
Analysts' estimates for Q4 2010 range from a low of $0.78 to a high of $0.84, compared to a consensus estimate of $0.819. The consensus EPS forecast has increased over the past week from $0.818 to $0.819 (0.12%) and decreased over the past month from $0.821 to $0.819 (-0.24%). Of the 14 analysts making quarterly forecasts, 3 raised and 2 lowered their forecast.
Upward revision in the analysts' estimates is attributable better sales than were anticipated by the company and analysts. For instance, the company's comparable store sales decreased 4.6% for the four-week period ended Jan. 30, 2010, which was better than the company's guidance for sales to decrease 5% to 8%. In last year's January period, comparable store sales decreased 16.4%. Total company sales in January decreased 4.4%.
The stock closed Friday at $24.89, compared to the 52 week range of $13.71 and $37.21. In the last one year the share price has gained more than 57.8%. The stock is trading at a high PE of 21.54. PE could go down to 16 but the company's earnings may support a stock price in excess of $30 by end 2010.
