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JC Penney Co Inc (NYSE:JCP)
Gross Margin
33.06% (As of Apr. 2014)

Gross Margin is calculated as gross profit divided by its revenue. JC Penney Co Inc's gross profit for the three months ended in Apr. 2014 was $926 Mil. JC Penney Co Inc's revenue for the three months ended in Apr. 2014 was $2,801 Mil. Therefore, JC Penney Co Inc's Gross Margin for the quarter that ended in Apr. 2014 was 33.06%.

Warning Sign:

JC Penney Co Inc gross margin has been in long term decline. The average rate of decline per year is -5.5%.

JCP' s 10-Year Gross Margin Range
Min: 27.68   Max: 39.36
Current: 29.45

27.68
39.36

During the past 13 years, the highest Gross Margin of JC Penney Co Inc was 39.36%. The lowest was 27.68%. And the median was 35.92%.

JCP's Gross Marginis ranked lower than
100% of the Companies
in the Global Department Stores industry.

( Industry Median: vs. JCP: 29.45 )

JC Penney Co Inc had a gross margin of 33.06% for the quarter that ended in Apr. 2014 => Competition eroding margins

The 3-Year average Growth Rate of Gross Margin for JC Penney Co Inc was -5.50% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

JC Penney Co Inc's Gross Margin for the fiscal year that ended in Jan. 2014 is calculated as

Gross Margin (A: Jan. 2014 )=Gross Profit (A: Jan. 2014 ) / Revenue (A: Jan. 2014 )
=3492 / 11859
=(Revenue - Cost of Goods Sold) / Revenue
=(11859 - 8367) / 11859
=29.45 %

JC Penney Co Inc's Gross Margin for the quarter that ended in Apr. 2014 is calculated as

Gross Margin (Q: Apr. 2014 )=Gross Profit (Q: Apr. 2014 ) / Revenue (Q: Apr. 2014 )
=926 / 2801
=(Revenue - Cost of Goods Sold) / Revenue
=(2801 - 1875) / 2801
=33.06 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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 33.06% for the quarter that ended in Apr. 2014 => Competition eroding margins


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

JC Penney Co Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Gross Margin 37.5339.2739.3238.6337.4139.3639.1936.0331.3129.45

JC Penney Co Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Gross Margin 37.6333.2232.5223.7930.8229.5529.4728.4033.0636.01
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