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How J. C. Penney (JCP) Looks Just Ahead of Q2 Earnings
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J. C. Penney Company, Inc. is slated to release second-quarter fiscal 2018 results on Aug 16, before the market opens. The company’s bottom line outperformed the Zacks Consensus Estimate in two of the trailing four quarters. Investors are keeping their fingers crossed and hoping that the company surpasses estimate this time.
Which Way Are Top & Bottom-Line Estimates Headed?
After registering a bottom-line decrease in the first quarter of fiscal 2018, J. C. Penney is likely to record year-over-year decline of 22.2% in the second quarter of fiscal 2018 as well. This is quite evident from
The Zacks Consensus Estimate for the quarter under review is pegged at a loss of 7 cents, which reflects an improvement of a couple of cents from the prior-year period. We also note that the Zacks Consensus Estimate has remained stable in the last 30 days.
The Zacks Consensus Estimate for revenues is pegged at $2,903 million, indicating a roughly 2% decline from the year-ago quarter. We note that total revenues of this Texas-based company decreased 4.3% in the last reported quarter.
Let’s delve deeper and find out the factors impacting the results.
J. C. Penney has taken up several strategic initiatives to drive traffic. The company, in order to enhance customer shopping experience, has been focusing on remodeling, renovating and refurbishing its stores with special focus on enhancing high-margin center core department that houses handbags, fashion accessories, sunglasses and fashion jewelry. The company stated that it is planning to rebrand and modernize 100 salons to Salon by InStyle. Also, it started conducting promotional activity again, which we believe could be a successful sales driver.
Moreover, J. C. Penney continues to work on improving its omni-channel reach. As online shopping traffic is higher than average, improving their shopping experience is the key to build a strong online portal. To drive more online traffic, the company is providing convenient shipping and pickup options like pick up in store same day facility, ship to any J. C. Penney store and faster home delivery across its store network. The company made investments to boost supply-chain efficiency.
Further, the company’s Sephora stores, which have done exceptionally well in the past and is regarded as one of the best performing categories, continues to draw more customers. In fact, these shops are part of J. C. Penney’s strategy to gain a competitive edge over other beauty product retailers and drugstores that have significantly enhanced their cosmetics businesses in the recent years. Also, the company stated that it is likely to open nearly 30 Sephora stores during 2018.
Despite these measures, competitive pressure or any markdowns may impact margins. Gross margin, an important metric for the financial health of the company, contracted 240 basis points (bps) in the reported quarter to 33.7%. Per management, gross margin was primarily impacted by sluggishness in the e-commerce business, markdowns and pricing actions to clear the inventory and negative comp performance in women's apparel.
Management earlier expected second-quarter comps in the middle of the annual guidance range of flat to up 2%.
What Does the Zacks Model Say?
Our proven model does not conclusively show that J. C. Penney is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Macy’s (M - Free Report) has an Earnings ESP of +0.21% and a Zacks Rank of #2.
Ross Stores (ROST - Free Report) has an Earnings ESP of +2.72% and a Zacks Rank of #2.
Caseys General Stores (CASY - Free Report) has an Earnings ESP of +3.47% and a Zacks Rank of #2.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
How J. C. Penney (JCP) Looks Just Ahead of Q2 Earnings
J. C. Penney Company, Inc. is slated to release second-quarter fiscal 2018 results on Aug 16, before the market opens. The company’s bottom line outperformed the Zacks Consensus Estimate in two of the trailing four quarters. Investors are keeping their fingers crossed and hoping that the company surpasses estimate this time.
Which Way Are Top & Bottom-Line Estimates Headed?
After registering a bottom-line decrease in the first quarter of fiscal 2018, J. C. Penney is likely to record year-over-year decline of 22.2% in the second quarter of fiscal 2018 as well. This is quite evident from
The Zacks Consensus Estimate for the quarter under review is pegged at a loss of 7 cents, which reflects an improvement of a couple of cents from the prior-year period. We also note that the Zacks Consensus Estimate has remained stable in the last 30 days.
The Zacks Consensus Estimate for revenues is pegged at $2,903 million, indicating a roughly 2% decline from the year-ago quarter. We note that total revenues of this Texas-based company decreased 4.3% in the last reported quarter.
Let’s delve deeper and find out the factors impacting the results.
J. C. Penney Company, Inc. Price and EPS Surprise
J. C. Penney Company, Inc. Price and EPS Surprise | J. C. Penney Company, Inc. Quote
Factors Influencing Q2
J. C. Penney has taken up several strategic initiatives to drive traffic. The company, in order to enhance customer shopping experience, has been focusing on remodeling, renovating and refurbishing its stores with special focus on enhancing high-margin center core department that houses handbags, fashion accessories, sunglasses and fashion jewelry. The company stated that it is planning to rebrand and modernize 100 salons to Salon by InStyle. Also, it started conducting promotional activity again, which we believe could be a successful sales driver.
Moreover, J. C. Penney continues to work on improving its omni-channel reach. As online shopping traffic is higher than average, improving their shopping experience is the key to build a strong online portal. To drive more online traffic, the company is providing convenient shipping and pickup options like pick up in store same day facility, ship to any J. C. Penney store and faster home delivery across its store network. The company made investments to boost supply-chain efficiency.
Further, the company’s Sephora stores, which have done exceptionally well in the past and is regarded as one of the best performing categories, continues to draw more customers. In fact, these shops are part of J. C. Penney’s strategy to gain a competitive edge over other beauty product retailers and drugstores that have significantly enhanced their cosmetics businesses in the recent years. Also, the company stated that it is likely to open nearly 30 Sephora stores during 2018.
Despite these measures, competitive pressure or any markdowns may impact margins. Gross margin, an important metric for the financial health of the company, contracted 240 basis points (bps) in the reported quarter to 33.7%. Per management, gross margin was primarily impacted by sluggishness in the e-commerce business, markdowns and pricing actions to clear the inventory and negative comp performance in women's apparel.
Management earlier expected second-quarter comps in the middle of the annual guidance range of flat to up 2%.
What Does the Zacks Model Say?
Our proven model does not conclusively show that J. C. Penney is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
J. C. Penney has a Zacks Rank #3 but an Earnings ESP of -25.41%, making surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Macy’s (M - Free Report) has an Earnings ESP of +0.21% and a Zacks Rank of #2.
Ross Stores (ROST - Free Report) has an Earnings ESP of +2.72% and a Zacks Rank of #2.
Caseys General Stores (CASY - Free Report) has an Earnings ESP of +3.47% and a Zacks Rank of #2.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>