J. C. Penney Company Inc.
once again failed to meet expectations as the company's much
touted turnaround plan failed to deliver the desired results. The
company's spree of losses continued during the fourth quarter of
fiscal 2012, dashing all hopes of recovery, at least for the near
The company posted adjusted quarterly loss of $1.95 per share
compared with earnings of 21 cents in the comparable year-ago
quarter. The Zacks Consensus Estimate for the quarter was a loss
of 19 cents.
Including one-time items, the quarterly loss came in at $2.51,
wider than the loss of 41 cents in the prior-year quarter.
The company's quarterly sales of $3,884 million plunged 28.4%
year over year and fell significantly short of the Zacks
Consensus Estimate of $4,164 million. Internet sales via jcp.com
waned 34.4% to $315 million in the quarter. Comparable-store
sales decreased 31.7% during the quarter compared with a decline
of 1.8% in the prior-year period.
Gross profit plummeted 43.6% to $924 million, whereas gross
profit margin contracted 640 basis points to 23.8%, signifying
lower sales and increased markdowns to clear inventory.
Turnaround Efforts Flounder
J. C. Penney, which is in a transitory phase, is scrambling to
remould itself from the way it had operated before Ron Johnson
took charge. The company announced an array of measures, which
include new pricing strategy, fresh logo, strategic merchandise
initiatives, cost reduction and enhancement of customers'
shopping experience, which in turn will augment store sales
productivity, thus inducing margin expansion and bottom-line
However, the restructuring initiatives are failing as the
company is showing no signs of improvements and lagging its
) in terms of performance.
We believe that the company needs to be more vocal regarding
its pricing mechanism and better align its marketing efforts to
For spring 2013, J. C. Penney intends to expand the home
products section by opening approximately 20 shops in 505
outlets. Moreover, the company will add 700 Joe Fresh apparel
shops on Mar 15, 2013. For fiscal 2013, the company has 60
Sephora inside jcpenney store openings on its cards, taking the
total store count to 446.
Other Financial Details
J. C. Penney ended the quarter with cash and cash equivalents
of $930 million, long-term debt of $2,868 million and
shareholders' equity of $3,171 million. The company incurred
capital expenditures of $230 million and produced free cash flow
of $415 million during the quarter.
Currently, J. C. Penney holds a Zacks Rank #3 (Hold), which
could witness a downgrade in the near term.
PENNEY (JC) INC (JCP): Free Stock Analysis
KOHLS CORP (KSS): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
To read this article on Zacks.com click here.