Executive Summary

• JCPenney reported 3Q16 adjusted EPS of $(0.21), in line with the consensus estimate.
• Total revenues were $2.86 billion, below expectations of $2.95 billion. Comparable-store sales were down 0.8% versus expectations of a 2.2% increase. Comps were positive in October, driven by a comp benefit of more than 20 basis points from the company’s 500 new appliance showrooms. That said, apparel sales were soft. All apparel categories, including men’s, kids’ and women’s, performed below the total company comp, with men’s apparel posting the best performance. In women’s apparel, sales were soft in the contemporary, juniors and misses categories, but were strong in moderate dresses and junior bottoms.
• Management lowered its guidance for the full year. Comps are now expected to increase by 1%–2%, down from 3%–4% previously, versus consensus of 2.2%. EPS is still expected to be positive, consistent with prior guidance.