J. C. Penney Company Inc. (JCP), one of the leading retailers, recently reported its sales results for the five-week period ended April 02, 2011. The company’s comparable-store sales for March 2011 inched down 0.3% with total sales plummeting 4.0% to $1,467.0 million.
The sales results were negatively impacted due to the shift in Easter holiday to April 24 this year from April 4 in the prior year.
During the period under review, The Plano, Texas-based J. C. Penney registered comparable-store sales growth across jewelry, women’s attire and accompaniments with the southwest region recording maximum sales.
As announced earlier, the company extended its ‘MNG by Mango’ and ‘Call it Spring by the ALDO Group’ brands to 292 and 100 J. C. Penney stores, respectively.
J. C. Penney’s well diversified supplier base, compelling private and national brands, marketing campaigns, point-of-sale technology initiatives as well as effective cost and inventory management should bode well for sales and margin trends over the long term. The company also remains on track to deliver comparable-store sales growth and boost market share.
Moreover, the in-store Sephora departments continue to attract younger and more affluent customers. These are part of J. C. Penney’s strategy to gain competitive advantage over drug stores, which gave their cosmetic sections facelifts in the recent years. The Sephora concept instigates confidence and is expected to be a significant revenue driver. Hence, the company plans to open 21 Sephora stores in April.
The company has been focusing on remodeling, renovating and refurbishing its stores in order to enhance customers’ shopping experience. To that end, it also refreshes its website functionality, keeping in mind continued migration to online shopping.
We remain confident about J. C. Penney’s top-line growth based on compelling new merchandise and launch of JCP Rewards program. Management provided guidance for total sales growth in the low single-digit range and earnings between $2.00 and $2.10 for fiscal 2011.
Currently, we have a long-term ‘Outperform’ rating on the stock. Moreover, J. C. Penney, which competes with Macy’s Inc. (M) and Kohl’s Corporation (KSS), holds a Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ recommendation.
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