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JCPenney Stock Is High Due to Strong Q4 Results

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Feb. 28 2019, Published 10:20 a.m. ET

JCPenney beats fourth-quarter estimates

JCPenney (JCP) stock rose 22.5% as of 9:49 AM EST on February 28 due to the company’s fourth-quarter[1. Fiscal Q4 2018 ended February 2019] results. The results were announced before the markets opened. JCPenney’s overall revenues (net sales and credit income) fell 8.4% to $3.79 billion but beat analysts’ forecast of $3.78 billion. JCPenney’s fourth-quarter net sales fell 9.5% to $3.67 billion. The company’s same-store sales fell 4.0% compared to analysts’ expectation of a decline of 4.3%.

Macy’s (M) reported a 2.5% decline in its fourth-quarter net sales to $8.46 billion on February 26.

Under the leadership of CEO Jill Soltau (who assumed the role in October 2018), JCPenney is trying to improve its sales in women’s apparel, activewear, special size clothing, and the fine jewelry categories. The company is trying to moving away from lower-margin categories like appliances.

JCPenney’s adjusted EPS fell to $0.18 in the fourth quarter—compared to $0.51 in the fourth quarter of 2017. Analysts expected an adjusted EPS of $0.10.

JCPenney’s adjusted net loss per share was $0.94 in fiscal 2018—compared to its adjusted EPS of $0.10 in fiscal 2017. The company’s overall revenues fell 6.6% to $12.0 billion in fiscal 2018.

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Turnaround efforts

JCPenney plans to shut down 18 full-line stores in fiscal 2019, which includes closing three locations that the company announced on January 8. JCPenney plans to close nine ancillary home and furniture stores. The company intends to align its physical stores with its omnichannel network to better serve its customers.

JCPenney is struggling to survive in a challenging retail environment. Online retailers are gradually crushing department stores and traditional brick-and-mortar retailers. The company also faced pressure last year due to the sudden departure of several key executives including CEO Marvin Ellison and CFO Jeffrey Davis.

Currently, JCPenney expects to generate positive free cash flow in fiscal 2019.

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