NEW YORK (AP) - J.C. Penney Co. reports earnings for the fourth quarter on Friday before the market opens. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Department store chains such as J.C. Penney have faced increasing challenges since the financial meltdown intensified in September. Shoppers — worried about their shrinking retirement funds and job security amid massive layoffs — have shut their wallets, focusing on the necessities and shrugging off more discretionary purchases like apparel.
BY THE NUMBERS: Penney narrowed its guidance earlier this month to a range between 90 cents and 93 cents per share, from 90 cents to $1.05 cents per share. Analysts surveyed by Thomson Reuters are forecasting earnings of 92 cents per share on revenue of $5.77 billion for the fourth quarter.
ANALYST TAKE: Barclays Capital retail analyst Robert Drbul wrote that, while Penney is facing an "extremely challenging macro and sales environment," he believes "the longer-term prospects and positioning of the company are quite solid." He added that the consolidation and closures under way in the department store industry could create opportunities for boosting Penney's market share.
WHAT'S AHEAD: The Plano, Texas-based chain has been trying to woo younger customers with an expanded assortment of trendy affordable fashion labels. This year, it introduced new teen apparel clothing lines exclusive to the chain including Decree and Fabulosity by Kimora Lee Simmons.
New this spring are Allen B. by Allen B. Schwartz and "Heart" Ronson by Charlotte Ronson. As part of its efforts to try to draw shoppers from trendier chains, Penney is spotlighting some of its trendy fashions in a TV ad campaign that will launch Sunday during the Academy Awards.
Despite solid sales in its trendier fashion business, Penney's overall business is tough as shoppers are just not spending. Earlier this month, Penney trimmed its fourth-quarter earnings guidance after reporting that same-store sales fell 10.8 percent in the quarter. Same-store sales, sales at stores open at least a year, are considered a key indicator of a retailer's fiscal health.
Analysts will want to know how much inventory is being cut back this year and how are sales so far. Investors will also want to know whether Penney plans to alter its real estate strategy.
STOCK PERFORMANCE: Shares have fallen 26 percent in the fourth quarter and dropped 68 percent over the past 52 weeks. The stock has been hovering around $15, at the low end of its 52-week range of $13.95 to $51.42.
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