Surely, it was not a great holiday for
J. C. Penney Company Inc
. (
JCP
), a leading retailer of apparel and footwear, accessories, fashion
jewelry, beauty products and home furnishings, as the company
failed to utilize the busiest shopping season of the year.
The company witnessed a mere 0.3% increase in comparable store
sales during the five-week period ended December 31, 2011compared
with an increase of 3.7% in the prior-year period.
During the period under review, The Plano, Texas-based J. C.
Penney registered comparable-store sales growth across women's
accessories and children's attire. However, total sales inched down
2.3% year over year to $2,886 million during the reported
period.
The company's comparable-store sales for the forty-eight week
period inched up 0.7%. However, total sales dropped 2.4% to $16,459
million.
J. C. Penney has experienced a continuous fall in its
comparable-store sales for the last four months prior to December
2011. Comps declined 1.9% in August, 0.6% in September, 2.6% in
October and 2% in November.
Moreover, situation is more or less same for monthly sales data,
which has been falling persistently - 4.5% in August, 3.6% in
September, 6.6% in October and 5.9% in November.
Further, the scenario is gradually becoming worse for the
company as retailers such as
Macy's Inc
.
(
M
),
Saks Incorporated
(
SKS
),
Ross Stores Inc
.
(
ROST
) and
Limited Brands Inc
.
(
LTD
) posted healthy December comparable-store sales growth of 6.2%,
5.8%, 9% and 7%, respectively.
Drop in Guidance
Considering its soft sales results and higher markdowns, J. P.
Penney trimmed its earlier sales and earnings forecast for the
fourth quarter of 2011. The company now expects comparable store
sales to be down marginally compared with the prior-year period and
forecasts adjusted EPS in the range of $0.65 to $0.70 per share.
Earlier, J. C. Penney forecasted comparable store sales to
remain flat to up slightly and earnings between $1.05 and $1.15 per
share for the fourth quarter of 2011.
Amid the gloom, J. C. Penney is trying every means to return
back to its growth trajectory. The company's ongoing efforts to
manage expenses and optimize operations, while continuing to invest
in the opening of additional Sephora inside J.C. Penney beauty
boutiques and the launching of new businesses under its Growth
Brands Division is expected to generate incremental profits in the
upcoming quarters.
Currently, J. C. Penney retains a Zacks #3 Rank, which
translates into a short-term "Hold" rating. Moreover, considering
the company's fundamentals, we have a long-term 'Neutral'
recommendation.
PENNEY (JC) INC (
JCP
): Free Stock Analysis Report
LIMITED BRANDS (
LTD
): Free Stock Analysis Report
MACYS INC (
M
): Free Stock Analysis Report
ROSS STORES (
ROST
): Free Stock Analysis Report
SAKS INC (
SKS
): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research