JCPenney (JCP, Financial) is expected to release its first quarter earnings on May 13, and several analysts are expecting a price rise after the earnings release on coming Wednesday. In fact, the optimism has been eminent soon after the company shared the information in April this year that it expects the comparable sales to top expectations in the first quarter. The information shared on the same-store sales was pretty interesting and let’s take a bird eye view of what is being expected to witness in the earnings report of the U.S. retailer.
Going by the company data
In the previous month when JCPenney disclosed some of the information with respect to the first quarter it stated that based on the quarter-to date performance and the shift in the timing of Easter this year, it seems that the first quarter’s same store sales would rise at least between 3.5%-4.5%. This company estimate surpasses the gain in comparable store sales predicted by analysts that stands at 3.1% gain, as per data of FactSet.
But soon after the announcement, the stock slid nearly 4% amid worries that heavy discounting could eat into the profits of the retailer though the footfalls to its conventional stores might show a dramatic improvement during the first quarter of the fiscal year 2015. It has been noted that JCPenney’s website featured a 30%-60% discount on fashion jewelry and 30%-50% off on home merchandise.
But, nevertheless, the company’s same store sales forecast is based on sales data at stores that have been open at least for a year. This reflects that the retailer’s financial health remains sound while gauging into the quarter’s expected sales quantum.
The analysts’ take
Analysts are expecting that the EPS will show remarkable improvement from the adjusted EPS of $1.12 per share the company posted in the same quarter a year ago. Though the company missed the Street estimate on earnings for the last quarter, it has consecutively exceeded the earnings estimate for the preceding four quarters which reflects the strong financials of the retailer amid existing challenges.
Revenue is being expected to move to around $2.855 billion for the quarter, which would represent a year-over-year growth of about 2% from revenue of $2.801 billion reported in the same quarter a year earlier. Interestingly, the company has been outperforming the analysts’ forecast in terms of top line for three of the past four quarters, and it is likely that the same trend would be witnessed during this quarter when the comparable same store sales data will be finally declared by the top brass on this Wednesday. In the past quarter, the revenue beat analysts’ expectations by a margin of around 0.66%.
Parting word
One thing is clear that the management is highly optimistic on posting good numbers for the first quarter, but all said, it remains to be seen whether the top and bottom line beats the Street expectations or not. So, let’s stay tuned for the earnings release of JCPenney which is scheduled this week.
