J C Penney Company Inc Earnings Preview: Continued Losses Expected

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J C Penney is scheduled to release its next earnings report this week, and analysts are looking for signs of continued progress on its turnaround efforts. Each earnings report provides another piece of the puzzle, although most analysts are remaining on the sidelines for now.

What to expect in J C Penney’s earnings report

Consensus estimates suggest the aging department store operating will post losses of 79 cents per share, although Sterne Agee CRT analysts Charles Grom, Renato Basanta and John Parke are slightly more optimistic at a loss of 71 cents per share. That’s an improvement of their previous estimate of losses of 80 cents per share.

They expect a 4% increase in comparable same store sales, which is about in line with management’s guidance and Wall Street’s estimate. It’s also an increase from their previous estimate of a 2% increase. They’re expecting to see J.C. Penney’s gross profit margin expand by 300 basis points because they think the trends that were improving going into the first quarter continued.

They’re also expecting to see an EBIT loss of $114.1 million and net income losses of $217.8 million.

Trends still improving at J C Penney

The Sterne Agee CRT said it’s encouraging that J C Penney has seen its clearance sales become more and more profitable. Also the department store chain has seen higher penetration rates of private label merchandise.

Grom and team said they’re expecting about a 2% decline in selling, general and administrative expenses compared to last year, which would bring them to approximately $988.9 million. The main reason for the decline is the company’s continued plan of shutting down stores. Also management has been focusing on keeping its cost structure “relatively lean.”

Management guided for a decline of $50 million to $100 million in the 2015 fiscal year. The Sterne Agee CCRT added that they think management will back the previously provided guidance as the first quarter probably fell within their full year comparable store sales increase of between 3% and 5%.

The analysts maintained their Neutral rating on J C Penney. As of this writing, shares of J C Penney were up 3.41% to $8.79 per share.

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