In the second quarter, mall and brand operator Simon beat Wall Street estimates even as its JCPenney business acted as a slight drag, but only after a stronger past performance.
Simon topped a MarketBeat-published analyst consensus estimate for earnings, at $1.43 per diluted share, and revenue, at $1.25 billion.
Results for the second quarter of 2022 include a non-cash unrealized loss of $17.8 million, or five cents per diluted share, from a mark-to-market in fair value of equity instruments, Simon reported. The 2021 period included a non-cash gain of $118.4 million, or 32 cents per diluted share, from the reversal of a deferred tax liability within an international investment.
Revenue was $1.28 billion versus $1.25 billion in the year-prior quarter. Operating income was $626.8 million versus $604.7 million in the year-earlier period.
Funds From Operations, which corresponds to cash flow from operations, were $1.09 billion, or $2.91 per diluted share, as compared to $1.22 billion, or $3.24 per diluted share, in the prior year, according to Simon.
In a conference call, David Simon, the company’s chairman, president and CEO, said that JCPenney and certain brands in the SPARC business had combined in a 19 cents lower contribution to FFO. The JCPenney negative contribution stemmed principally from costs associated with the launch of new brands with some sales softness. SPARC Group is a joint venture between Simon Property Group and Authentic Brands Group. SPARC brands include Aéropostale, Brooks Brothers, Eddie Bauer, Forever 21, Lucky Brand, Nautica and Reebok. However, Simon added that JCPenney and SPARC delivered an “unbelievable” year last annum. He added JCPenny is well positioned to weather economic turmoil with $1.3 billion in liquidity.