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Earnings Highlights and Summary

For the first quarter ended May 05, 2018, J. C. Penney's total revenues fell 4.1% to $2.67 billion compared to $2.78 billion for the first quarter ended April 29, 2017. The decline in total net sales was primarily the result of the 141 stores that closed in Q2 and Q3 2017.The Company's reported quarter comparable sales increased 0.2 % on a y-o-y basis.J. C. Penney's reported numbers beat analysts' estimates of $2.61 billion.

During Q1 2018, J. C. Penney's cost of goods sold, which excludes depreciation and amortization (D&A), was $1.71 billion, or 66.3 % of sales, compared to $1.73 billion, or 63.9 % of sales, in Q1 2017. The increase as a rate of sales was primarily driven by increased online clearance selling and continued growth in the mix of the Company's online business, markdown, and pricing actions taken in the reported quarter to clear slow-moving seasonal inventory and ongoing growth in major appliances.

For Q1 2018, J. C. Penney's SG&A expenses were $826 million, or 32.0 % of sales, compared to $938 million, or 34.7 % of sales, in Q1 2017. The improvement in SG&A expenses was primarily driven by lower controllable costs and marketing spending and a reduction in lease expense.

For Q1 2018, J. C. Penney reported net loss was $78 million, or $0.25 per share, compared to a net loss of $187 million, or $0.60 per share, in Q1 2017. The Company's adjusted net loss was $69 million, or $0.22 per share, for the reported quarter compared to adjusted net income of $2 million, or $0.01 per share, for the year earlier corresponding quarter. J. C. Penney's reported numbers were better than Wall Street's estimates of $0.23 per share.

Cash Matters

J. C. Penney's inventory at the end of Q1 2018 was $2.95 billion, reflecting a decrease of 1.4 % compared to the end of Q1 2017, and up 2.6 % on a comparable store basis. The Company's capital expenditures for the reported quarter, net of landlord allowances, were $103 million.

As of May 05, 2018, J. C. Penney's cash and cash equivalents were $181 million. During the reported quarter, the Company utilized available cash on hand to retire $190 million principal amount of outstanding secured notes that matured in February 2018. J. C. Penney also issued $400 million in senior secured second priority notes due 2025, utilizing the net proceeds of the offering to successfully complete its tender offer for $375 million aggregate principal amount of its outstanding 2019 and 2020 bonds. The Company ended Q1 2018 with liquidity of approximately $2 billion.

Outlook

For the fiscal year 2018, J. C. Penney is forecasting comparable store sales to be in the range of 0.0 % to 2.0 %. The Company is expecting adjusted earnings for FY18 to be in the band of negative $0.07 to positive $0.13 per share.

Change in CEO

On May 22, 2018, J. C. Penney announced that Chairman and CEO Marvin R. Ellison has notified the Company of his decision to resign from his role to pursue another opportunity with Lowe's Companies, Inc.

J. C. Penney's Board of Directors has elected Lead Independent Director Ronald W. Tysoe as Chairman of the Board and has created the Office of CEO which will be comprised of Chief Financial Officer, Jeff Davis; Chief Customer Officer, Joe McFarland; Chief Information Officer and Chief Digital Officer, Therace Risch; and Executive Vice President of Supply Chain, Mike Robbins. These four leaders will share equal responsibility for the Company's day-to-day operations until a new CEO is appointed. A search committee has been formed to conduct a search for a Chief Executive Officer at J.C.Penney.

Stock Performance Snapshot

June 20, 2018 - At Wednesday's closing bell, J. C. Penney's stock fell 1.08%, ending the trading session at $2.76.

Volume traded for the day: 7.02 million shares.

Stock performance in the last month - up 10.40%

After yesterday's close, J. C. Penney's market cap was at $866.36 million.

The stock is part of the Services sector, categorized under the Department Stores industry. This sector was up 0.6% at the end of the session.

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