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Analyst Blog

J. C. Penney Company Inc. (JCP - Analyst Report), a leading retailer of apparel, footwear, accessories, fashion jewelry, beauty products and home furnishings, recently reported its sales results for the five-week period ended January 1, 2011.

The company’s comparable-store sales for December 2010 climbed 3.7%, following an increase of 9.2% and a fall of 3.8%, witnessed in November 2010 and December 2009, respectively. For the forty-eight week period, comparable-store sales rose 2.7% compared with a decline of 6.5% in the same period last year.

Total sales also climbed during the month under review. After experiencing an increase of 7.2% in November 2010, sales in December jumped 2.3% to $2,955 million from $2,889 million in the same month last year. For the forty-eight week period total sales edged up 1.4% to $16,855 million from $16,616 million in the same period last year.

The Plano, Texas-based retailer, J. C. Penney, notified that all merchandise divisions registered comparable-store sales growth with fine jewelry, women’s accessories and men’s apparel being the best performing categories. Geographically, the southeast and northeast regions were the top performing regions.

Internet sales via rose 5.4% for the month under review driven by fine jewelry, shoes and accessories. J. C. Penney witnessed a surge in traffic counts at its off-mall stores compared with mall-based stores.

 J. C. Penney, which competes with Macy’s Inc. (M - Analyst Report) and Kohl’s Corporation (KSS - Analyst Report), currently operates more than 1,100 department stores in the United States and Puerto Rico.

J. C. Penney’s well diversified supplier base, compelling merchandise, marketing campaigns, technological initiatives as well as effective cost and inventory management should drive sales and margin trends over the long term.

The company remains on track to deliver comparable-store sales growth and boost market share. Management guided comparable-store sales growth of 3% to 4% for fourth-quarter 2010. The in-store Sephora concept inspires confidence and is expected to be a significant revenue driver.

Currently, we have a Neutral rating on the stock. Moreover, J. C. Penney holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating, and correlates with our long-term recommendation.

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