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JC Penney Posts Upbeat Holiday Sales, Reiterates FY17 View


J. C. Penney Company, Inc. JCP reported positive comparable-store sales (comps) this festive season, unlike the prior year. It delivered comps growth of 3.4% for the combined nine weeks period, ending on Dec 30, 2017.

Robust comps performance was driven by solid sales at home, beauty and fine jewelry. It was also fueled by the company’s sturdy e-commerce business that recorded double-digit sales increase year over year. The e-commerce growth was primarily driven by sought-after gifting categories like home decor as well as luggage, fine jewelry, toys, boots and athletic footwear. Apparel categories, mainly women’s and kids, continued its positive momentum as well.

However, shares of the company dipped 0.3% yesterday as management reaffirmed its guidance for fiscal 2017, despite the upbeat holiday comps performance. Management still projects comps to be in the range of down 1% to flat. Adjusted earnings are also reiterated in the range of 2-8 cents per share versus 8 cents reported in fiscal 2016. The Zacks Consensus Estimate for the fiscal is currently pegged at 7 cents per share. Further, analysts polled at Zacks expect revenues of $12.47 billion, down 0.6% for the same year.

Meanwhile, J. C. Penney continues to struggle with high-debt levels. At the end of the last reported quarter, total long-term debt was $4,039 million reflecting a debt-to-capitalization ratio of 78.9%. Furthermore, a challenging retail landscape and stiff online competition from Amazon.com, Inc. AMZN still remain potent threats. These factors have weighed upon the company’s shares that plunged 51.3% in a year, significantly wider than the industry’s decline of 6.2%.

Nevertheless, management is optimistic about delivering growth and providing enhanced shopping experience to customers. Also, the company’s efforts toward remodeling, renovation and refurbishment of stores with special attention on enhancing the reach of national and especially private-label brands bode well.

Apart from this Zacks Rank #3 (Hold) company, Macy's, Inc. M came out with its holiday sales data. It recorded comps growth of 1.1% for the combined November and December period.

A better-ranked stock in the same industry is Dillard's, Inc. DDS, which has delivered a positive earnings surprise of 115.8% in the last quarter. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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