Will Sephora Carry J C Penney Company Inc (JCP) to Strong Q4 Earnings?
J C Penney Company Inc (JCP) Consumer Discretionary – Multiline Retail | Reports February 26, Before Market Opens
The Estimize consensus is calling for EPS of $0.25, three cents higher than the Street’s forecast, and revenue of $4.002 billion, roughly $7 million higher than the Street
Last quarter, J C Penney Company Inc reported YoY revenue and comp growth of 4.8% and 6.4%, respectively
In-store Sephora departments have been a key growth catalyst for JCP, as the strongest performing category since the relationship began in 2006
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J C Penney Company Inc is scheduled to report fourth quarter earnings, Friday before the opening bell. Following pre-announced same stores sales growth of 3.9% from November-December, JCP seems poised to post another positive earnings surprise. This quarter, the Estimize consensus is calling for EPS of $0.25 and revenues of $4.002B, 3 cents higher on the bottom line and $7 billion higher in sales compared to Wall Street. The Estimize community has been bearish on J C Penney Company’s profitability this quarter, pushing EPS estimates down 19% in the past 3 months. Historically, the company beats Wall Street 76% of the time while failing to surpass Estimize 44% of the time.Driven by its strategic initiatives, J.C. Penney delivered a positive earnings surprise in the most recent quarter. The company’s ongoing stance on overhauling its core business has slowly begun to payoff. Between November and December this past year, comp store sales grew 3.9% on the back of strong demand for its private label offerings, higher online sales, and the exploding popularity of its in-store Sephora department. Like other retailers, JCP has focused on improving its online shopping experience and omni-channel reach. The company is also remodeling and renovating its stores with a goal of enhancing high margin departments such as handbags and beauty products. In-store Sephora departments have been a key growth catalyst for JCP, as the strongest performing category since the relationship began in 2006. On the downside, JCP continues to face competitive pressure from all sides, both from other department stores as well as e-commerce retailers. The company also carries a high debt obligation, reporting long term debt over $5.1 billion last quarter and generating negative free cash flow of $3.24 million. Poor finances may be enough to overshadow the company’s recent success when it reports fourth quarter earnings.
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