J C Penney Company Inc (JCP): Is The Turnaround Happening?


The foremost factor that comes to investors mind is whether J C Penney Company Inc (NYSE:JCP) would be able to erase the bad memory of missing the Street analysts’ earnings expectations. Its earnings missed predictions in the fourth quarter. Both the quarters are totally different. While the fourth quarter gets the benefit of the holiday season, the first quarter results would indicate the realization of gift vouchers. More so, the bulk of the year’s retail sales happen during the holiday season. This would be totally missing in the first quarter.

Factors To Consider

The company has made progress in recent quarters on its turnaround, but investors will be seeking continued evidence that the company is reconnecting with its core customers. JC Penney hopes to drive higher purchase conversion on its apparel in its stores and on jcp.com.  Investors hope for continued improvements in the home business through improvements in store presentation and brand mixes.

An additional factor was the weak global oil prices compared to the previous year. Since September last year, oil prices have witnessed a downtick and reached a five-year low in January. Lower oil prices meant that consumers would have extra money to spend.

J C Penney Company Inc (NYSE:JCP)’s ability to attract consumers preferring online would also hold a key factor in the final numbers for the first quarter.

Economy Slowed

Recently, the government data suggested that the GDP in the United States, which is considered as the widest measurement of an economic uptick, could witness only 20 basis points growth in the first quarter. This was far below the 1% predicted by economic analysts. However, it was said to be better than the last year’s first quarter when Polar Vortex’ turned into negative.

While the strong Greenback might have been one of the reasons for the weaker economic growth, the significant aspect was the consumer spending grew higher than estimated in the first quarter. Therefore, how much J C Penney would have been able to gain from it remained to be seen. However, it was weaker than the preceding three quarters, which was not unusual.

What To Expect

Street analysts’ are expecting J C Penney Company Inc (NYSE:JCP) to suffer a loss of 75 cents a share and generate $2.86 billion revenue for the first quarter. Last year, the company incurred a loss of $1.16 a share and generated $2.8 billion revenue.

Analysts’ have already widened their loss estimations from 72 cents a share three months ago. However, they have narrowed their predictions from a loss of 76 cents a share one month back. During the past four quarters, its bottom line failed to meet the Street predictions only once. J C Penney Company Inc (NYSE:JCP) will report its results May 13th after market hours.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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