JCPenney’s Q3 Top Line Numbers Disappointed Investors



Stock plunges on third-quarter results

JCPenney (JCP) disappointed investors yet again when it reported its fiscal 2018 third-quarter results (for the period that ended on November 3) on November 15. The mid-tier department store chain’s revenue fell 5.3% to $2.73 billion and missed analysts’ expectation of $2.81 billion. Its revenue included its net retail sales as well as its credit income and other revenue. JCPenney’s net sales fell 5.8% to $2.65 billion in the quarter. The company’s same-store sales fell 5.4%.

After falling significantly in the initial premarket hours, JCPenney stock recovered with a rise of 1.6% as of 10:49 AM EST on November 15.

JCPenney’s top line results were in contrast to those of Macy’s (M), which reported a 2.3% rise in its third-quarter net sales and same-store sales growth of 3.1% on an owned basis.

JCPenney’s adjusted EPS were -$0.52 per share in the third quarter of fiscal 2018 compared to its -$0.35 adjusted EPS in the third quarter of fiscal 2017. Analysts had been expecting adjusted EPS of -$0.56. The company’s gross margin deteriorated in the quarter as a result of higher markdowns.

Despite its cost-control measures and initiatives to improve its sales by focusing on categories such as beauty and home, JCPenney is failing to improve its performance.

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Earnings guidance withdrawn

JCPenney withdrew its previously issued earnings outlook for fiscal 2018 to give more time to its new CEO, Jill Soltau, and its interim CFO, Michael Fung, to assess the current situation. JCPenney now expects its same-store sales to fall in the low single digits in fiscal 2018. It had previously expected its same-store sales to be flat in fiscal 2018 compared to the previous year.


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