Before markets open Friday morning, retailer J.C. Penney Co. Inc. (NYSE: JCP) is scheduled to report first-quarter 2016 results. Analysts are looking for a net loss per share of $0.38 and revenues of $2.92 billion. In the same quarter last year, the company posted a net loss of $0.57 per share on revenues of $2.86 billion.

Things were going pretty well for J.C. Penney until about a week ago, when a report in the New York Post revealed that poor sales in April forced the company to take unprecedented cost-cutting steps in order to maintain its bottom line. J.C. Penney also banned the use of corporate credit cards and forbade more price markdowns during the period. Both full-time and part-time employees had their working hours reduced.

Since that report, shares have tumbled more than 13% from $8.93 at last Thursday’s closing bell to $7.74 in the noon hour Thursday. Analysts reacted by increasing their estimated quarterly per share loss from $0.36 to $0.38, although that’s still an improvement of an expected quarterly loss of $0.41 registered three months ago.

In the fourth quarter of the last fiscal year, J.C. Penney reported net income per share of $0.39, far above the prior year’s quarterly loss of $0.11 and even further above analysts’ consensus for a net loss of $0.23 per share. The company said at the time that it expected same-store sales to rise 3% to 4% in the current fiscal year, gross margins to improve by 40 to 60 basis points, and EBITDA to rise to $1 billion. By the end of the year, J.C. Penney expects adjusted earnings to be positive and free cash flow to improve.

That’s a tall order given the troubles that have swamped Macy’s Inc. (NYSE: M), Kohl’s Corp. (NYSE: KSS) and other retailers who have already reported results. Combined with J.C. Penney’s own last-minute cost cutting, which probably saved around $8,000 per store, or something more than $8 million, in wage costs, the general retail environment for the most recent quarter can only be described as dim.

Even if J.C. Penney was able to cut costs, revenues could fall short of expectations. Retail Metrics expects first quarter same-store sales to rise 2.9%, but Kohl’s was expected to report a small same-store sales gain as well and wound up reporting a drop of 3.1%. Macy’s was expected to report a same-store sales decline of 3.1%, but sales dropped by nearly twice that amount. Expecting J.C. Penney to beat these odds is probably wishful thinking.

J.C. Penney shares traded down about 1.9% at the end of the noon hour Thursday, at $7.74 in a 52-week range of $6.00 to $11.99. The consensus price target on the stock is $11.46.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.