JC Penney (JCP) Plunges After-Hours On Quarterly Losses

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The shares of JC Penney Company plunged more than 11% to $8.06 per share during the extended hours trading after reporting losses for the fourth quarter of 2014 on Thursday.

JC Penney fourth quarter results

JC Penney Company reported $59 million in net losses or $0.19 per share for the fourth quarter compared with a net income of $35 million or $0.11 per share in the same period a year earlier.

On adjusted basis, the company said its net income improved $206 million to breakeven.

Last month, analysts at Sterne Agee analyst Charles Grom forecasted that JC Penney Company would experience an intra-quarter slide.

The company explained that its net income last year benefitted from a one-time$270 million non-cash tax credit of $270 million. The changes in its income tax resulted to a year-over-year negative impact of $292 million on its current net income.

During the quarter, JC Penney Company said its revenue increased from 3.78 billion to $3.89 billion. Its comparable store sales improved 4.4%.  The company said its online sales climbed 12.4% to $428 million.

JC Penney Company said its gross margin improved 540 basis points to 33.8 % of sales from 28.4% in the same period last year. Its SG&A expenses rose $28 million to $1.032 billion, which account for 26.5% of its sales.  The company ended 2014 with positive free cash flow of $57 million.

Commenting on the full-year performance of the company, JC Penney CEO Mike Ullman said, “2014 was a successful year for JCPenney. Thanks to the hard work and outstanding execution by our teams. We significantly grew sales and gross margin, and delivered on our goal to generate positive free cash flow, representing a $2.8 billion improvement over last year.”

On the other hand, its president and CEO-designee Marvin Ellison said, “I have been very impressed by what I have seen in my first few months at JC Penney… I believe 2015 will be an important year for JCPenney, and the team is focused on profitably executing our business.”

Business outlook

For the fiscal 2015, JC Penney Company expected to achieve a comparable store sales growth of around 3% to 5%. Its gross margin is expected to improve 50 to 100 basis points compared last year.

The company estimated that its SG&A expenses will decline between $50 and $100 million. Its free cash flow its expected to be flat.

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