Market Overview

Very Different Earnings Expectations For Struggling Retailers J.C. Penney And Sears

  • Two huge struggling retailers are expected to report their fourth-quarter results this week.
  • Wall Street analysts have very different expectations for both of them.
  • Will investors cheer a positive surprise or rosy guidance from either of them?

Even more than most, struggling retailers depend on the fiscal fourth quarter, which includes the holiday shopping season, not only to thrive, but just to survive. Judging by the expectations of Wall Street analysts, things are looking better for J C Penney Company Inc (NYSE: JCP) than for Sears Holdings Corp (NASDAQ: SHLD).

Both companies are expected to post their latest earnings this week, in the parade of reports from big retailers that kicked off last week with unimpressive results from Wal-Mart and Nordstrom. Can either Sears or J.C. Penney offer up a positive surprise for investors or rosy guidance, and if they do, how much will it matter?

Below is a quick look at what is expected from the reports of J.C. Penney and Sears. That is followed by a quick peek at some of the week's other most anticipated retail earnings.

J.C. Penney

Wall Street's fourth-quarter forecast for this department store operator calls for earnings per share (EPS) to have risen from breakeven in the year-ago period to $0.23. The consensus of 30 Estimize respondents sees a penny more, though both Estimize and Wall Street underestimated EPS in the past three quarters. The Wall Street estimate has ticked down by a penny in the past 60 days.

Both Wall Street and Estimize are looking for revenue to come in at about $3.99 billion, which would be the highest quarterly revenue in the past two years. J.C. Penney posted $3.89 billion in revenue in the year-ago period. The company is scheduled to report before Friday's opening bell.

See also: Were Wal-Mart's Earnings Really All Doom And Gloom?


When this operator of Sears and Kmart stores shares its results early Thursday, the Wall Street forecast is that it will show a net loss of $1.36 per share for the fiscal quarter. That would compare to the $0.47 per share loss in the same period of last year. Note that the estimate was -$1.01 just 60 days ago, the loss was deeper than expected in two of the past three periods, and Estimize has no consensus forecast.

Revenue for the three months that ended in January will total $7.26 billion, or down more than 10 percent year over year, if the Wall Street analysts are correct. They also see full-year revenue more than 19 percent lower than in the previous year to $25.10 billion, and a deeper net loss of $11.46 per share.

And Others

Foot Locker, Home Depot, L Brands, Lowe's, Office Depot, Target and TJX Companies are among the retail companies that Wall Street analysts expect to show earnings growth this week.

Earnings declines are in the works for Best Buy, Chico's FAS, Gap, Kohl's and Macy's, as well as a net loss for Sears, if the consensus forecasts are correct.

At the time of this writing, the author had no position in the mentioned equities.

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