J.C. Penney Company Inc. (JCP) recently reported its sales results for the four-week period ended January 29, 2011. The company’s comparable-store sales for January 2010 dipped 1.2%. Lower inventory clearance coupled with bad weather hampered the January performance. Total sales dropped 3.9% during the month to $903 million.

The Plano, Texas-based J.C. Penney, notified that all merchandise divisions registered comparable-store sales growth with women’s apparel and accessories being the best performing categories. Geographically, the southeast and northeast regions led the results.

For the fourth quarter of fiscal 2010, the company reported comparable store sales of 4.5%, ahead of its guidance of a 3–4% rise, and sales growth of 2.8% to $5,703 million. For fiscal 2010, comparable store sales growth came in at 2.5% while total sales registered an increase of 1.2% to $17,758 million.

Guidance

Backed by strong sales and gross margin along with good expense management, the company now sees fourth quarter earnings in the range of $1.06 to $1.09 per share, up from the previous guidance of 90 cents to $1.00 per share.

J.C. Penney, competing with retailers like Macy’s Inc. (M) and Kohl’s Corporation (KSS), currently operates 1,100 plus department stores in the United States and Puerto Rico.

J.C. Penney’s well diversified supplier base, compelling merchandise, marketing campaigns, technological initiatives as well as effective cost and inventory management should drive sales and margin trends over the long term.

Despite the lackadaisical January figures, the company remains on track to deliver comparable-store sales growth and boost market share as evidenced by its decent fourth quarter sales results. The in-store Sephora concept inspires confidence and is expected to be a significant revenue driver.

Currently, we have a long-term Neutral rating on the stock. Moreover, J.C. Penney holds a Zacks #3 Rank, which translates into a short-term Hold rating, and correlates with our long-term recommendation.

 
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