Company Update (NYSE:JCP): J.C. Penney Company Inc Announces Second Quarter 2016 Financial Results

J.C. Penney Company Inc (NYSE:JCP) financial results for its second quarter ended July 30, 2016. Comparable sales increased 2.2 % for the second quarter, delivering a two-year stack of 6.3%. Net loss improved 52% to $(56) million versus the prior year.

Marvin R. Ellison, chairman and chief executive officer, said, “We are pleased with the sequential improvement we achieved throughout the second quarter, and our solid performance across all key metrics is encouraging. We exceeded our profitability expectations, achieving an $85 million or 59 % increase in EBITDA to $229 million for the quarter. We are continuing to win market share and improve the bottom line of our business thanks to the commitment and hard work of our over 100,000 associates.”

Ellison continued, “We are excited about the initiatives we have in place to drive incremental growth in the back half of the year with our appliance rollouts, new Sephora locations, center core refreshes, in-store .com fulfillment and our chain wide rollout of buy online, pick up in store same day. These and other initiatives reinforce our confidence in our ability to achieve $1 billion in EBITDA for 2016.”

For the quarter, Sephora, Home, and Footwear and Handbags were the Company’s top performing divisions. Geographically, the Ohio Valley and Pacific were the best performing regions of the country.

For the second quarter, gross margin was 37.1 % of sales, a 10 basis point improvement compared to the same period last year.

SG&A expenses for the quarter decreased $48 million to $853 million, or 29.2 % of sales, representing a 210 basis point improvement from last year. These savings were primarily driven by lower corporate overhead, incentive compensation, store controllable costs and more efficient advertising spend.

For the second quarter, the Company delivered a 52% improvement in net loss over the prior year to $(56) million or $(0.18) per share.  Excluding the previously announced write-off of unamortized debt issuance costs of $34 million related to the closing of the real estate term loan refinancing and other items, adjusted earnings per share improved 88% to a loss of $(0.05) per share for the second quarter this year compared to a loss of $(0.40) per share last year.

EBITDA improved $85 million to $229 million for the quarter, a 59 % improvement from the same period last year. Excluding restructuring charges and the proportional share of net income from the home office land joint venture, adjusted EBITDA improved 69 % to $233 million, a $95 million improvement from the same period last year.

A reconciliation of GAAP to non-GAAP financial measures is included in the schedules accompanying the consolidated financial statements in this release.


The Company reaffirms its 2016 full year guidance as follows:

  • Comparable store sales: expected to increase 3% to 4%;
  • Gross margin: expected to increase 10 to 30 basis points;
  • SG&A dollars: expected to decrease versus 2015;
  • EBITDA1: expected to be $1 billion;
  • Adjusted earnings per share1: expected to be positive;
  • Free cash flow1: expected to improve versus 2015.

The Company also announced an upcoming new store location in San Bernardino, Calif. at Inland Center, and the relocation of its store in Salinas, Calif. to a new space within Northridge Mall.  The new store and relocation are both landlord funded projects, and are expected to be complete this fall. Each location will offer an appliance showroom, an expansive Sephora inside JCPenney and a flagship Salon by InStyle. (Original Source)

Shares of are up nearly one percent to $10.05 in pre-market trading Friday. JCP has a 1-year high of $11.99 and a 1-year low of $6. The stock’s 50-day moving average is $8.96 and its 200-day moving average is $9.00.

On the ratings front, JCP has been the subject of a number of recent research reports. In a report issued on July 25, Deutsche Bank analyst Paul Trussell reiterated a Buy rating on JCP, with a price target of $12, which implies an upside of 20.7% from current levels. Separately, on July 18, Jefferies Co.’s Randal Konik reiterated a Hold rating on the stock .

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Paul Trussell and Randal Konik have a total average return of 2.4% and 0.3% respectively. Trussell has a success rate of 55.6% and is ranked #975 out of 4110 analysts, while Konik has a success rate of 48.7% and is ranked #2183.

The street is mostly Neutral on JCP stock. Out of 11 analysts who cover the stock, 6 suggest a Hold rating , 3 suggest a Buy and 2 recommend to Sell the stock. The 12-month average price target assigned to the stock is $8.50, which represents a potential downside of 14.5% from where the stock is currently trading.

J. C. Penney Co., Inc. operates department stores, which consist of selling merchandise and services to consumers through its department stores. The company sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora inside jcpenney and home furnishings. Its department stores provide its customers with services such as styling salon, optical, portrait photography and custom decorating. 


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