Post Earnings Coverage as J.C. Penney’s Adjusted EPS Soared 64.1%

Upcoming AWS Coverage on Bon-Ton Stores Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 14, 2017 / Active Wall St. announces its post-earnings coverage on J.C. Penney Co., Inc. (NYSE: JCP). The Company reported its financial results for the fourth quarter fiscal 2016 (Q4 FY16) and full year 2016 (FY16) on February 24, 2017. Marvin R. Ellison, the Company’s Chairman and Chief Executive Officer, said:

“We are pleased that in the face of a very challenging 2016 retail environment we delivered our first positive net income since 2010.” Register with us now for your free membership at:

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One of J.C. Penney’s competitors within the Department Stores space, The Bon-Ton Stores, Inc. (NASDAQ: BONT), reported on Tuesday, March 14, 2017 its financial results for Q4 and full year fiscal 2016. AWS will be initiating a research report on Bon-Ton Stores in the coming days.

Today, AWS is promoting its earnings coverage on JCP; touching on BONT. Get our free coverage by signing up to:

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Earnings Reviewed

For its fiscal fourth quarter ended January 28, 2017, J.C. Penney reported net sales of $3.96 billion, down 0.9% on a y-o-y basis. The Company’s reported numbers missed analysts’ consensus of $3.97 billion. Comparable store sales were (0.7) % for the reported quarter and flat for the full year. On a two-year stack basis, comparable sales grew 3.4 % and 4.5 % for the fourth quarter and full year, respectively. Home, Sephora, Salon, and Fine Jewelry were the Company’s top performing merchandise divisions during the quarter. Geographically, the Southeast and Pacific were the best performing regions of the country. For the full year 2016, J.C. Penney reported net sales of $12.5 billion compared to $12.6 billion in 2015, a (0.6)% decrease. Comparable store sales were flat for the year.

For Q4 FY16, J.C. Penney’s gross margin was 33.1 % of sales, a 100 basis point decline compared to the same period last year. Gross margin was impacted primarily by increased promotional activity during the reported quarter, coupled with the continued growth in both online and major appliances. For FY16, J.C. Penney’s gross margin decreased 30 basis points to 35.7 % from 36.0 % in the prior year.

For Q4 FY16, J.C. Penney delivered a $323 million improvement in net income over the prior year to $192 million, or $0.61 per share. Adjusted earnings improved $81 million to $0.64 per share for the reported quarter compared to $0.39 per share last year. Adjusted earnings excluded charges primarily associated with restructuring costs, supplemental retirement plans mark-to-market adjustment, and the tax impact resulting from other comprehensive income allocation. The Company’s earnings numbers surpassed market expectations of $0.61 per share. For the full year, the Company delivered a $514 million improvement in net income over the prior year to $1 million, or $0.00 per share, compared to ($1.68) per share last year. Adjusted earnings per share improved to $0.08 per share for the year compared to ($1.03) per share last year.

During Q4 FY16, J.C. Penney’s EBITDA improved $288 million to $427 million, including the $62 million gain on the home office sale, a 207 % improvement from the same period last year. Adjusted EBITDA for the quarter improved $68 million, or 18 %, to $449 million. EBITDA improved $477 million, including $62 million gain on the home office sale, to $1.0 billion for the year, a 91 % improvement compared to last year. Adjusted EBITDA for the year improved $294 million to $1.0 billion, a 41% improvement versus last year.

Inventory

J.C. Penney’s inventory at year-end was $2.85 billion, an increase of 4.9% compared to the previous year-end. Approximately 370 basis points of the increase was driven by floor samples for appliance showrooms and higher inventory levels to support the Company’s continued investment in new Sephora shops. Other basic replenishment inventory accounted for an additional 260 basis points of the increase in inventory. These increases were partially offset by decreases in fashion and seasonal apparel and other inventory levels.

Store Closure

In a separate press release on the same day J.C. Penney announced that it is implementing a plan to optimize its national retail operations as part of the Company’s successful return to profitability. Under the plan, the Company expects to close two distribution facilities and approximately 130 – 140 stores over the next few months. These strategic decisions will help align the Company’s brick-and-mortar presence with its omnichannel network, thereby redirecting capital resources to invest in locations and initiatives that offer the greatest revenue potential.

Outlook

For full year 2017, J.C. Penney is forecasting comparable store sales in the range of -1% to +1%. The Company expects gross margin to be up 20 to 40 basis points versus 2016. J.C. Penney is projecting adjusted earnings per share to be in the range of $0.40 to $0.65.

Stock Performance

At the close of trading session on Monday, March 13, 2017, J.C. Penney’s stock price declined 5.82% to end the day at $5.99. A total volume of 22.41 million shares were exchanged during the session, which was above the 3-month average volume of 20.87 million shares. The stock currently has a market cap of $1.83 billion.

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