JC Penney Q4 Profit Tops View, But Sales Miss; Cuts Hundreds Of Jobs, Stock Down

(RTTNews) - J. C. Penney Company Inc. (JCP) reported a profit for the fourth-quarter 2017 that increased 32.3 percent from last year, primarily due to a $75 million tax reform benefit. Total net sales for the quarter increased 1.8 percent from the previous year, while quarterly comparable sales increased 2.6 percent. It cut hundreds of jobs after a restructuring.

Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.

In the Friday pre-market trade, JCP is trading at $3.55, down $0.37 or 9.35 percent.

Looking ahead for fiscal year 2018, the company expects adjusted earnings per share to be in the range of $0.05 to $0.25. Analysts expect annual earnings of $0.20 per share. Comparable store sales are expected to be 0.0% to 2.0%.

The company noted that about 130 Home Office positions were eliminated across various departments. Additionally, it recently restructured its group, regional, district and store support teams. This restructure eliminated bureaucracy, reduced support positions and reallocated store headcount to customer-facing positions. While the restructuring enabled the vast majority of impacted associates to assume a new role or leadership position within the stores organization, approximately 230 positions were subsequently eliminated.

The annual cost savings generated from the home office and store reorganization are estimated at approximately $20 million - $25 million.

The company also announced that it appointed Joe McFarland as executive vice president and chief customer officer, a newly-expanded role that includes responsibility for merchandising, as well as leading all JCPenney store operations.

Jodie Johnson has been promoted to head of merchandising for women's, beauty and family footwear; and James Starke has been promoted to head of merchandising for men's, children's, home and jewelry, both reporting to McFarland. Additionally, Therace Risch, will assume the combined titles of Chief Information Officer and Chief Digital Officer to reflect her added responsibility for omnichannel retail. As a result of this appointment, Mike Amend will be leaving the Company.

J. C. Penney reported that its net income for the fourth-quarter rose 32.3 percent to $254 million, from the prior year's $192 million, with earnings per share improving to $0.81 from $0.61 last year. The improvement was primarily due to a $75 million tax reform benefit recorded in the fourth quarter this year.

Adjusted net income for the fourth quarter was $179 million or $0.57 per share, compared to $202 million or $0.64 per share in the previous year. The prior year result included a gain of $62 million, or $0.20 per share, associated with the sale of the Company's home office. Analysts polled by Thomson Reuters expected the company to report earnings of $0.47 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter increased 1.8 percent to $4.03 billion from $3.96 billion in the prior year. Wall Street expected revenues of $4.05 billion for the quarter. Comparable sales increased 2.6 percent in the fourth quarter and were on the same 13 week basis as the fourth quarter last year.

The company noted that Jewelry, Home, Sephora, Footwear and Handbags and Salon were the Company's top performing divisions during the quarter. Geographically, the Southeast and Gulf Coast were the best performing regions of the country.