J.C. Penney: Earnings Barely Top Estimates, Outlook Is Tepid

JC PenneyJ.C. Penney (JCP) reported a second-quarter profit, compared to break-even earnings per share in last year's second quarter, benefiting from higher sales and tight inventory controls. But the department store chain offered a weaker-than-expected outlook.

J.C. Penney said it benefited from higher store and Internet sales, as well as tightly managing its business and controlling expenses, which resulted in record-level gross margins for the second quarter.

It earned $14 million, or 6 cents per share, in the quarter, up from a loss of $1 million, or break-even per share, in the same quarter last year. This beat analyst estimates by the proverbial penny.

Sales were unchanged from last year at $3.94 billion -- and slightly below Wall Street expectations of $4 billion. Same-store sales grew by approximately 1% over the same quarter last year.

"Uncertain Consumer Climate"

Chairman and CEO Myron (Mike) Ullman said, "Driving the top line is an important priority of our Long Range Plan. As we do this, we recognize that our customers continue to be under financial pressure."

Going forward, the company sees same-store sales in the third quarter growing 2% to 3%, sales increasing by 1% to 2% and earnings per share in the range of 16 cents to 20 cents.

"Taking into account management's conservative approach to the second half of the year in what continues to be an uncertain consumer climate, the Company now expects 2010 full-year earnings per share to be in the range of $1.40 to $1.50 per share," the company said. This is below consensus estimates of $1.54 per share.
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