J.C Penney Sales Disappoint Again

J. C. Penney Company Inc. (JCP - Analyst Report), a leading retailer of apparel and footwear, accessories, fashion jewelry, beauty products and home furnishings, recently reported sales results for the four-week period ended November 26, 2011. The company’s comparable-store sales for November inched down 2% compared with a 9.2% increase in the prior-year period.

As per the company, it followed its earlier approach of opening stores at 4 a.m. on Black Friday, which led to a decline in the comparable store sales.

During the period under review, The Plano, Texas-based J. C. Penney registered comparable-store sales growth across women's and men’s attire and accessories. However, total sales decreased 5.9% year over year to $1,737 million during the period under review.

The company’s comparable-store sales for the forty-three week period inched up 0.8%. However, total sales inched down 2.4% to $13,573 million.

Earlier, J. C. Penney delivered third-quarter 2011 earnings of 11 cents a share that came way ahead of the Zacks Consensus’ estimated Loss of 12 cents a share. However, it plunged 42.1% from the prior-year quarters earnings of 19 cents a share.

On a reported basis, including one time items, the company reported a loss of 67 cents a share.

Further, the quarterly sales of $3,986 million fell short of the Zacks Consensus Estimate of $4,021 million, and declined 4.8% from the prior-year quarter. Total sales were adversely affected by the discontinuation of the catalogs business. Internet sales through jcp.com decreased 5.4% to $341 million in the quarter.

The in-store Sephora departments continue to outperform in attracting younger and more affluent customers. During the quarter, J. C. Penney opened 32 Sephora stores, bringing the total count to 308. The Sephora concept is expected to be a significant revenue driver.

Moreover, the company notified that it has also expanded the MNG by Mango and Call It Spring by The ALDO Group to 500 and 505 locations, respectively.

J. C. Penney, provided guidance for fourth-quarter 2011 comparable store sales to remain flat to up slightly, while total sales is expected to decrease 250 to 300 basis points less than comparable store sales.

Currently, we have a long-term ‘Neutral’ recommendation on the stock. However, J. C. Penney holds a Zacks #4 Rank that translates into a short-term ‘Sell’ rating, reflecting the company’s dismal November sales results and disappointing fouth quarter sales outlook.

Read the full analyst report on JCP