Post Earnings Coverage as J.C. Penny’s Earnings Surpassed Expectations

Upcoming AWS Coverage on Dillard’s Post-Earnings Results

LONDON, UK / ACCESSWIRE / June 2, 2017 / Active Wall St. announces its post-earnings coverage on J.C. Penney Co., Inc. (NYSE: JCP). The Company reported its first quarter fiscal 2017 results on May 12, 2017. The retailer posted a y-o-y decline in net sales and re-affirmed its FY17 outlook. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of J.C. Penney Co.’s competitors within the Department Stores space, Dillard’s, Inc. (NYSE: DDS), announced on May 11, 2017, its operating results for Q1 2017 which ended on April 29, 2017. AWS will be initiating a research report on Dillard’s in the coming days.

Today, AWS is promoting its earnings coverage on JCP; touching on DDS. Get our free coverage by signing up to: http://www.activewallst.com/register/.

Earnings Reviewed

In Q1 FY17, J.C. Penny reported total net sales of $2.71 billion, which declined 3.7% compared to total net sales of $2.81 billion in Q1 FY16. The Company’s comparable store sales for the reported quarter fell 3.5% compared to 0.4% in the prior year’s corresponding ago. J.C. Penny’s revenue numbers lagged behind analysts’ consensus of $2.76 billion.

For the three months ended on April 29, 2017, J.C. Penny posted gross profit of $983 million, or 36.3% of net sales, compared to gross profit of $1.02 billion, or 36.2% of net sales, at the end of April 30, 2016. The Company’s gross margin was positively impacted by improving selling margin, which was partially offset by the continued growth in the Company’s online and major appliance business.

In Q1 FY17, the Company’s EBITDA was $40 million compared to EBITDA of $176 million in Q1 FY16. The Company’s adjusted EBITDA for the reported quarter improved $102 million, or 67 % to $255 million compared to the year ago comparable period.

For Q1 FY17, J.C. Penny reported net loss of $180 million, or $0.58 per diluted share, compared to net loss of $68 million, or $0.22 per diluted share, in Q1 FY16. The Company’s adjusted net income improved $116 million, or $0.38 per share, to $0.06 per share for the reported quarter compared to a net loss of $97 million, or ($0.32) per share, in the year ago same period. J.C. Penny’s adjusted net income for Q1 2017 and Q1 2016 includes the sale of operating assets, which totaled $117 million and $8 million, respectively. The Company’s earnings numbers came in ahead of Wall Street’s expectations for a loss of $0.22 per share.

Operating Earnings

During Q1 FY17, J.C. Penny posted operating loss of $105 million compared to operating income of $22 million in Q1 FY16. The Company’s SG&A for the reported quarter declined $29 million to $843 million compared to SG&A of $872 million. These savings were primarily driven by lower marketing, store controllable costs and incentive compensation.

J.C. Penny’s inventory for the three months ended on April 29, 2017, was $2.95 billion, which increased of 0.8% compared to the inventory of $2.93 billion at the end of April 30, 2016. The Company stated that approximately 300 basis points of the increase was driven by floor samples for appliance showrooms and higher inventory levels to support its continued investment in new Sephora shops.

Cash Flow & Balance Sheet

In Q1 FY17, J.C. Penny utilized $346 million in cash from operations compared to $394 million in cash from operations in Q1 FY16.

J.C. Penny’s cash and cash equivalents balance was $363 million as on April 29, 2017, compared to balance of $415 million at the end of April 30, 2016. During the reported quarter, the Company utilized available cash on hand to retire $220 million of outstanding bonds that matured in April. J.C. Penny ended the quarter with a liquidity position of approximately $2.4 billion.

Outlook

For FY17, J.C. Penny is forecasting comparable store sales in the range of -1% to +1%. The Company is projecting gross margin to be up 20 to 40 basis points versus 2016. J.C. Penny anticipates its adjusted earnings per share to be in the range of $0.40 to $0.65.

Stock Performance

J.C. Penney’s share price finished yesterday’s trading session at $4.83, advancing 2.77%. A total volume of 71.59 million shares exchanged hands, which was higher than the 3 months average volume of 19.06 million shares. The stock currently has a market cap of $1.47 billion.

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