The market is looking to extend yesterday's rally, and shares of department store retailer J.C. Penney Inc. (NYSE: JCP) are also moving higher. Today's price move comes in reaction to estimate beating numbers, despite posting a decline in fourth-quarter. For the quarter, the retailer said that its profit slipped 10% to $430 million, but the decline was smaller than expected as the company's costs control offset lower sales from the weak consumer spending environment. J.C. Penney posted quarterly earnings of $1.93 per share, topping analysts' predictions for earnings of $1.77 per share. These numbers were down from $477 million, or $2.09 per share reported in the same period a year ago, but in the current market environment is being viewed as a victory by Wall Street.
The company did post a decline its fourth-quarter revenue which slipped 4% to $6.39 billion, down from $6.66 billion a year earlier. The drop in revenue came as the retailer had to face a weal consumer environment brought by the U.S. housing market slowdown, higher food and fuel prices.
Consumers' fear over a possible recession put a curb on their spending and the results came with lower same-store sales during the months of December and January. Analysts had been expecting J.C. Penney to show revenue of $6.39 billion in the quarter, according to Thomson Financial.
Looking ahead, the retailer expects to see an improvement in its first-quarter total sales. Full-year total sales are also expected to rise in the low-single digit range. With "no clear indication that the consumer environment will improve during 2008," J.C. Penney forecast first-quarter earnings in a range between 75 cents and 80 cents per share, and full-year earnings between $3.75 and $4.00 per share. This comes below analysts' predictions for first-quarter earnings of 81 cents per share and full-year earnings of $4.02.
The department store retailer had a pretty difficult 2007, as the company had to face continued fears over a possible recession. The slumping housing market and credit crises brought a slowdown in consumer spending whose effects are reflected in the company's earnings. Regardless, J.C. Penney''s positive earnings results and its optimism over further gains seem to be enough to enthusiasm investors who pull shares up over 2% in early trading.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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