PLANO, Texas – J.C. Penney said Friday that its sales rose 6.4 per cent at established locations in the third quarter and expressed confidence about the upcoming holiday shopping season.
The company left its previous full-year sales forecast intact, but its shares fell almost 9 per cent in morning trading Friday.
That may reflect the disappointing results earlier this week from Macy’s and Nordstrom, which raised concerns about the holiday shopping season — a critical time when retailers get a big chunk of their annual sales. Macy’s said it expects sales for the holiday season to be down from a year ago, citing its need for markdowns to get rid of merchandise by the end of the year.
J.C. Penney, meanwhile, said its gross margin improved during the quarter, driven by supply chain productivity and improvements in margins for its sale items. The company is still losing money, but is hoping to change that by cutting costs and continuing to push up sales.
A big part of the strategy is focusing more on J.C. Penney’s private brands, which tend to cost the company less to carry on shelves than national name brands. J.C. Penney says private brands, which account for 51 per cent of sales, represent a big opportunity for improving margins.
“When you survey our customers, they believe that they are national brands,” said CEO Marvin Ellison, who joined the company a year ago.
Ellison also noted the company is increasingly using Sephora makeup locations within its stores to attract younger customers, and get them to visit more frequently and spend more per visit.
For the full year, J.C. Penney expects sales to be up between 4 to 5 per cent at established locations from the previous year.
But the company, based in Plano, Texas, is still trying to regain its footing and nevertheless reported a loss for the period.
For the quarter ended Oct. 31, the company said its loss narrowed to $137 million, or 45 cents per share. Losses, adjusted for one-time gains and costs, came to 47 cents per share. Analysts had forecast a steeper loss of 58 cents per share, according to Zacks Investment Research.
Revenue rose to $2.9 billion, also exceeding Street forecasts of revenue of $2.86 billion.
Shares of J.C. Penney Co. dropped 78 cents, or 8.9 per cent, to $8.01 in morning trading Friday. Penney shares have risen 36 per cent since the beginning of the year. The stock has risen 13 per cent in the last 12 months. Its shares were down 3 per cent at $8.53 in premarket trading Friday.
_____
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on JCP at http://www.zacks.com/ap/JCP
_____
Keywords: J.C. Penney, Earnings Report, Priority Earnings
