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GuruFocus has detected 2 Warning Signs with JC Penney Co Inc \$JCP.
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JC Penney Co Inc (NYSE:JCP)
Gross Profit
\$4,476 Mil (TTM As of Jan. 2017)

JC Penney Co Inc's gross profit for the three months ended in Jan. 2017 was \$1,312 Mil. JC Penney Co Inc's gross profit for the trailing twelve months (TTM) ended in Jan. 2017 was \$4,476 Mil.

Gross Margin is calculated as gross profit divided by its revenue. JC Penney Co Inc's gross profit for the three months ended in Jan. 2017 was \$1,312 Mil. JC Penney Co Inc's revenue for the three months ended in Jan. 2017 was \$3,961 Mil. Therefore, JC Penney Co Inc's Gross Margin for the quarter that ended in Jan. 2017 was 33.12%.

JC Penney Co Inc had a gross margin of 33.12% for the quarter that ended in Jan. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of JC Penney Co Inc was 39.36%. The lowest was 29.45%. And the median was 36.04%.

Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

JC Penney Co Inc's Gross Profit for the fiscal year that ended in Jan. 2017 is calculated as

 Gross Profit (A: Jan. 2017 ) = Revenue - Cost of Goods Sold = 12547 - 8071 = 4,476

JC Penney Co Inc's Gross Profit for the quarter that ended in Jan. 2017 is calculated as

 Gross Profit (Q: Jan. 2017 ) = Revenue - Cost of Goods Sold = 3961 - 2649 = 1,312

JC Penney Co Inc Gross Profit for the trailing twelve months (TTM) ended in Jan. 2017 was 1018 (Apr. 2016 ) + 1084 (Jul. 2016 ) + 1062 (Oct. 2016 ) + 1312 (Jan. 2017 ) = \$4,476 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

JC Penney Co Inc's Gross Margin for the quarter that ended in Jan. 2017 is calculated as

 Gross Margin (Q: Jan. 2017 ) = Gross Profit (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 ) = (Revenue - Cost of Goods Sold) / Revenue = 1,312 / 3961 = 33.12 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.

Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

JC Penney Co Inc had a gross margin of 33.12% for the quarter that ended in Jan. 2017 => Competition eroding margins

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

JC Penney Co Inc Annual Data

 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Jan17 Gross_Profit 7,671 6,915 6,910 6,960 6,218 4,066 3,492 4,261 4,551 4,476

JC Penney Co Inc Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Gross_Profit 1,013 1,314 1,041 1,065 1,082 1,363 1,018 1,084 1,062 1,312
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