JC Penney shares up as earnings, sales top estimates; retailer to close 18 department stores

Earnings

J.C. Penney is set to report earnings for the holiday quarter before the bell on Thursday.

Here’s what analysts are expecting, based on Refinitiv data:

  • Earnings per share, adjusted: 10 cents
  • Revenue: $3.79 billion
  • Same-store sales: a drop of 4.3 percent

Penney since last fall has had a new CEO, Jill Soltau, who’s already started shaking things up at the retailer in a bid to turn its business around. Penney has struggled with managing its inventory — getting dated apparel off shelves to make way for new styles — and hasn’t been able to take advantage of rival Sears’ struggles as much as anticipated. Its holiday sales were still dismal.

Since joining the department store chain, Soltau has already made decisions to shut Penney stores and get out of the appliance business, a category her predecessor, Marvin Ellison, had invested heavily in.

Soltau has said Penney, in turn, will make more investments in apparel — devoting even more space in stores to clothes and accessories. The verdict is still out for whether or not this approach will work. Penney has, meanwhile, vowed to get products to market faster to keep up with fast-fashion cycles.

It’s inevitable Penney will also be forced to shut more stores, as many analysts say the company still has too much real estate to keep up with today. The department store chain currently operates more than 860 locations across the U.S. Penney is expected to share more details around its real estate strategy on Thursday.

At least one analyst who covers the company, though, sees a light at the end of the tunnel for Penney.

“As the company moves past some near-term hurdles (i.e. appointing key management positions and exiting the appliance business), Penney has the potential to show material improvement in operations in 2020, in our view,” Gordon Haskett analyst Chuck Grom said in a research note ahead of Thursday’s earnings.

Penney shares have tumbled nearly 70 percent over the past 12 months to trade around $1.30. Its market cap is roughly $412 million. In December, the stock dipped below the $1 mark.

This is a developing story. Please check back for updates.

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