J.C. Penney Earnings Cheat Sheet: Swinging to a Loss After Two Quarters of Profit

S&P 500 (NYSE:SPY) component J.C. Penney Company Inc. (NYSE:JCP) dropped to a third quarter loss, but results topped expectations. J. C. Penney is a holding company that offers merchandise and services to consumers through department stores and direct (Internet/catalog) channels.

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J.C. Penney Company Earnings Cheat Sheet for the Third Quarter

Results: Reported a loss of $143 million (67 cents per diluted share) in the quarter. The department store had net income of $44 million or 19 cents per share in the year earlier quarter.

Revenue: Fell 4.8% to $3.99 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: JCP reported adjusted net income of 11 cents per share. By that measure, the company beat the mean analyst estimate of a loss of 12 cents per share. It fell short of the average revenue estimate of $4.07 billion.

Quoting Management: Executive Chairman Myron E. (Mike) Ullman, III , said, “While our more affluent customers continued to respond well to jcpenney’s attractions, the moderate customer continues to have limited discretionary spending capability, and that was apparent during the quarter. However, the combination of customer response to the style and value we offer in categories such as women’s and men’s apparel and accessories, coupled with the expense reduction initiatives we put in place over the course of 2011, allowed us to report results in line with our expectations.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the second quarter, by 3 cents in the first quarter, and by 2 cents in the fourth quarter of the last fiscal year.

The company’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $14 million in the second quarter, a profit of $64 million in the first quarter and $271 million in the fourth of the last fiscal year.

Revenue has fallen in the past two quarters. In the second quarter, revenue declined 0.8% to $3.91 billion from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from $1.29 a share to $1.14 over the last ninety days. For the fiscal year, the average estimate has moved down from $1.84 a share to $1.37 over the last ninety days.

Competitors to Watch: Sears Holdings Corporation (NASDAQ:SHLD), Saks Incorporated (NYSE:SKS), Macy’s, Inc. (NYSE:M), Kohl’s Corporation (NYSE:KSS), The Bon-Ton Stores, Inc. (NASDAQ:BONT), Dillard’s, Inc. (NYSE:DDS), Nordstrom, Inc. (NYSE:JWN), Overstock.com, Inc. (NASDAQ:OSTK), Wal-Mart Stores, Inc. (NYSE:WMT), Amazon.com (NASDAQ:AMZN), eBay (NASDAQ:EBAY) and Target Corporation (NYSE:TGT).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)