J C Penney released its latest earnings report before opening bell this morning, posting adjusted earnings of 64 cents per share on $3.96 billion in revenue. Wall Street had been looking for 81 cents per share and $3.99 billion in sales. In the year-ago quarter, the department store chain posted $3.99 billion in revenue and 39 cents per share in adjusted earnings.
J C Penney’s same store sales slip
Net income rose to 61 cents per share or $192 million. J C Penney said comparable store sales declined 0.7% during the fourth fiscal quarter, which ended on Jan. 28. For the full year, they were flat. EBITDA rose $288 million year over year to $427 million for the fourth quarter. That includes a gain of $62 million from the sale of the home office segment. Adjusted EBITDA rose 18% to $449 million.
The top-performing departments were Home, Sephora, Salon and Fine Jewelry. The Southeast and Pacific regions were the highest-performing geographic regions. The fourth quarter gross margin fell 100 basis points year over year to 33.1% of sales.
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“This year was not without its challenges, particularly in our women’s apparel business, but I am proud this team delivered on our goal to return our company to profitability in 2016,” J C Penney Chairman and CEO Marvin Ellison said in a statement. “This is no small feat when considering the situation a few years ago, but our over 100,000 associates embraced our strategy and came to work each day focused on doing their part to drive this incredible turnaround in profitability.”
The company took a $225 million pretax charge during the fourth fiscal quarter.
J C Penney guides for 2017
For this year, J C Penney expects adjusted earnings of 40 cents to 65 cents per share, compared to the consensus of 50 cents per share. The struggling department store operator expects comparable store sales to be between down 1% and up 1% year over year, versus the consensus of a 1.2% increase.
The company expects to shut down 130 to 140 stores over the next few months. It’s offering early retirement to approximately 6,000 workers who are eligible to retire. Through these cost savings methods, J C Penney expects to save about $200 million in annual costs.
Shares of the company rose initially after the earnings report but then slumped by as much as 3.35% to $6.63 in premarket trades this morning.