Sign in Subscribe
Petroleum industry

JC Penney Beats on Low Earnings, Surging Deficit Highlights Need for Action

Strategic Insights

— 1 min read

The recent financial reports and trade deficit statistics for September highlighted the challenges facing the US economy. JC Penney, a leading retailer, reported a significant drop in earnings, but managed to beat expectations with cost-cutting measures. Meanwhile, the trade deficit surged in September, driven largely by increased imports of oil and industrial supplies. Experts are calling for action to address the chronic deficit problem, recommending either a weak dollar or the development of domestic energy sources.

Key Takeaways:

  • JC Penney reported third-quarter 2009 earnings of 11 cents a share, down 80% from the prior-year quarter, but beating the Zacks Consensus Estimate by a penny.
  • The retailer raised its fiscal year 2009 earnings outlook to $0.93 to $1.08 per share, driven by effective inventory management and lowered unprofitable discounting.
  • The trade deficit surged in September, driven by increased imports of oil and industrial supplies, including natural gas.
  • The deficit with China was $22.1 billion in September, up from $20.1 billion in August, with China accounting for 60.5% of the total deficit.
  • Experts are calling for action to address the chronic deficit problem, recommending either a weak dollar or the development of domestic energy sources to reduce dependence on imported oil.
  • The development of domestic energy sources, particularly natural gas, is seen as a critical solution to reduce the trade deficit and increase energy security.
  • Companies like EnCana (NYSE: ECA) and Chesapeake (NYSE: CHK) are expected to benefit from the shift towards natural gas production.

Statistics:

  • JC Penney reported quarterly earnings of 11 cents a share, down 80% from the prior-year quarter.
  • The trade deficit surged to $37.4 billion in September, driven by increased imports of oil and industrial supplies.
  • The deficit with China was $22.1 billion in September, accounting for 60.5% of the total deficit.
  • Oil prices averaged $75.86 a barrel in September, while natural gas prices averaged $4.42 per million cubic feet (MCF).
  • The expected increase in natural gas production is expected to reduce the cost of energy for businesses, making a switch from oil to gas more attractive.

Sources:

  • Zacks Equity Research
  • JC Penney Company Inc. (NYSE: JCP)
  • Toyota (NYSE: TM)
  • Honda (NYSE: HMC)
  • EnCana (NYSE: ECA)
  • Chesapeake (NYSE: CHK)

Read more