Expectations from the first quarter
JCPenney (JCP) is slated to announce its results for the first quarter of fiscal 2019, which ended on May 4, on May 21. JCPenney beat analysts’ revenue expectations in two of four quarters in fiscal 2018 and came in ahead of earnings expectations in three quarters.
For the first quarter of fiscal 2019, analysts expect JCPenney’s revenue to fall 4.3% to $2.56 billion. JCPenney’s top line has fallen for four straight quarters due to company-specific weakness and the increasing rivalry from online players and off-price retailers.
Analysts expect the company’s loss per share to widen to $0.38 in fiscal 2019’s first quarter from a loss per share of $0.22 in fiscal 2018’s first quarter. A weak top line and markdowns on excess inventory are expected to hurt the bottom line.
Recap of previous performance
JCPenney’s revenue (comprising net sales and credit income) fell 8.4% to $3.79 billion in the fourth quarter of fiscal 201, which ended on February 2. Despite the significant decline, JCPenney beat analysts’ revenue estimate of $3.78 billion. The company’s net sales were down 9.5% to $3.67 billion, and same-store sales fell 4.0% in the fourth quarter.
JCPenney’s fiscal 2018 fourth-quarter adjusted EPS declined to $0.18, compared to $0.51 in fiscal 2017’s fourth quarter. However, the mid-tier department store chain beat analysts’ EPS estimate of $0.11.
Overall, JCPenney’s revenue fell 6.6% to $12.0 billion in fiscal 2018. JCPenney’s adjusted net loss per share was $0.94 in fiscal 2018, a significant deterioration compared to adjusted EPS of $0.10 in fiscal 2017.
JCPenney didn’t issue any outlook for fiscal 2019 as the company’s newly appointed management needed more time to assess the situation.
Under the leadership of CEO Jill Soltau, who joined JCPenney in October 2018, the company is trying to improve its situation by closing underperforming stores, implementing a better inventory management system, and focusing on core categories that are more profitable—like women’s apparel.
JCPenney’s path to recovery looks very challenging, given the intense rivalry in the retail market, uncertain macro environment, and persistent weakness in the company’s top line.