J.C. Penney Second-Quarter Loss Narrows as Rebuild ContinuesBy
Same-store sales increase 2.2%, indicating market-share gains
CEO says retailer will fuel growth will appliances, Sephora
J.C. Penney Co. posted a smaller fiscal second-quarter net loss, showing that while consistent profitability remains elusive, the department-store chain is making progress in a multiyear effort to rebuild its business.
The net loss narrowed to $56 million, or 18 cents a share, in the quarter ended July 30, from $117 million, or 38 cents, a year earlier, the Plano, Texas-based company said in a statement Friday. Sales rose 1.5 percent to $2.92 billion, in line with analysts’ $2.93 billion average estimate.
J.C. Penney is having some success in boosting sales, helped by an expanded women’s shoes assortment and larger beauty selection. Yet the company still has a ways to go to regain the stature it lost during former Chief Executive Officer Ron Johnson’s disastrous attempt to reinvent the retailer more than four years ago. The report comes the day after department-store rivals Macy’s Inc. and Kohl’s Corp. posted better-than-expected earnings for their most recent quarters, somewhat overshadowing J.C. Penney’s recovery.
“They really improved their merchandise assortment, they really focused on some of the core traffic drivers,” said Mary Ross Gilbert, an analyst at Imperial Capital LLC. “They’re really focused on giving the customer what the customer wants.”
J.C. Penney shares bounced between gains and losses and were down 0.6 percent to $9.88 at 9:55 a.m. in New York. The stock had surged 49 percent this year through Thursday, including an 8.6 percent gain yesterday, buoyed by optimism in the wake of the Macy’s and Kohl’s reports.
Same-store sales for J.C. Penney rose 2.2 percent, matching analysts’ average estimate. Current CEO Marvin Ellison said the company will fuel growth in the last half of the year by rolling out appliance sales, adding more locations for selling Sephora cosmetics and remodeling its stores. Traffic and comparable sales across all departments were positive in July, Ellison said on a conference call.
The company also said it’s under contract for a partial sale-leaseback of its home office and expects to close on the deal by the end of the year. J.C. Penney will host an analyst meeting to further outline strategic initiatives on Aug. 17.
The sales increase “shows market share gains and reinforces confidence that they have the right strategy in place,” said Poonam Goyal, an analyst at Bloomberg Intelligence.