JC Penney announces Q2 earnings, total sales boost 5.4%
16 Aug '05
7 min read
Earnings Guidance
For the third and fourth quarters, both comparable store sales and Direct (catalog/Internet) sales are expected to increase low-single digits. The company currently expects earnings from continuing operations in the area of $0.82 per share and $1.52 per share in the third and fourth quarters, respectively. This would result in full year earnings from continuing operations of approximately $3.35 per share, an increase of more than 50 percent from the $2.20 earned in 2004. This guidance reflects the impact of expensing stock options, as well as the classification of Renner as a discontinued operation. Average diluted share counts for EPS calculations are expected to be approximately 260 million shares, 245 million shares, and 260 million shares for the third quarter, fourth quarter and full year, respectively.
Earnings per share guidance for the balance of the year reflects the expectation for continued improvement in both gross margin and SG&A expense as a percent of sales, coupled with benefits from the common stock buyback program. The company currently expects full year operating profit of approximately 8 percent. With higher short-term interest rates, net interest expense for the balance of the year should benefit from higher levels of interest income on cash balances. The company now expects interest expense to be in the range of $45 to $50 million per quarter, based on the current interest rate environment.
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