J. C. Penney Company Inc
) rallied nearly 6% on the index after the company posted
narrower-than-expected fourth quarter fiscal 2013 loss followed
by an upbeat outlook for fiscal 2014. The company reported
adjusted loss of 68 cents that fared far better than the Zacks
Consensus Estimate of a loss of 79 cents and a loss of $1.95
reported in the prior year quarter.
Including one-time items, quarterly earnings came in at 11 cents
per share, compared with a loss of $2.51 per share in the
For full-year fiscal 2013, adjusted loss was $5.74 per share,
which widened from the prior-year quarter loss of $3.49 but
narrowed from the Zacks Consensus Estimate of a loss of $6.04 per
share. Including one-time items, yearly loss per share came in at
$5.57, which was wider than last year's reported loss of $4.49.
It seems that J.C. Penney's endeavors to give itself a facelift
have paid off as the company posted narrower-than-expected losses
and positive comparable-store sales (comps). According to the
CEO, J.C. Penney is now aiming to "go forward", which the third
stage of its turnaround, after having completed "immediate
stabilization" and "rebuilding" in the last 10 months.
The company has taken several strategic initiatives at the
managerial, marketing and merchandising levels to reinstate
itself on growth trajectory and compete better with its peers
The quarterly sales dipped 2.6% year over year to $3,782 million
and also fell short of the Zacks Consensus Estimate of $3,866
million. For the full year, sales declined 8.7% year over year to
$11,859, and lagged the Zacks Consensus Estimate of 11,930
However, comps increased 2% year over year and depicted a
sequential improvement of 680 basis points (bps). For the holiday
period, (November and December), sales grew 3.1% year over year.
Online sales through jcp.com (excluding the 53rd week) rose 26.3%
to $381 million from the prior-year quarter.
Men's apparel, Home and Women's accessories were the best
performing categories. Performance of Sephora stores was also
commendable. During the year, J. C. Penney opened 60 Sephora
outlets, bringing the store count to 446.
Gross profit plummeted 16.2% to $1,074 million. Gross profit
margin expanded 460 bps to 28.4%, in spite of unfavorable impact
from discontinuation of some brands and related inventory
clearance, along with higher clearance markdowns.
J. C. Penney's adjusted operating loss significantly narrowed
during the quarter and came in at $109 million compared with an
adjusted loss of $540 million in the year-ago quarter.
Other Financial Details
J. C. Penney ended the quarter with cash and cash equivalents of
$1,515 million, long-term debt of $4,839 million and
shareholders' equity of $3,087 million. Moreover, the company
generated free cash flow of $246 million in the said quarter. The
company incurred capital expenditures of $951 million in fiscal
For first-quarter fiscal 2014, J. C. Penney anticipates comps to
increase 3%-5% year over year. Additionally, there is a
projection that gross margin will improve while selling, general
and administrative (SG&A) expenses will decrease, both on a
For fiscal 2014, management now expects comps to increase in mid
single digits while gross margin is forecasted to considerably
improve from the prior-year quarter. Capital expenditure is
expected to be $250 million for the year. The company also
anticipates liquidity of over $2 billion at the end of the year.
Currently, J.C. Penney carries a Zacks Rank #4 (Sell).
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