J.C. Penney surprises in Q3
J.C. Penney gave its investors — and the retail industry — some good news on Friday, topping Street estimates and reporting better than expected sales for its third quarter.
Analysts had been expecting the worst: Two week ago, Penney cut its annual forecast and estimated that third quarter same-store sales would inch up 0.6% to 0.8%. But on Friday, the chain reported a 1.7% increase in same-same stores, resulting in a positive two-year stack of 0.9 %.
Penney's total net sales fell 1.8 % to $2.81 billion in the quarter, ended Oct. 28, better than analysts' estimates of $2.77 billion. The decline was attributed primarily the result of the 139 stores closed this year through the end of the third quarter.
Penney, similar to many other retailers, heavily discounted apparel in the third quarter to clear room for holiday merchandise. Those actions, combined with some other charges, took a toll on the company's profit. Penney’s net loss rose to $128 million, or a loss of 41 cents per share, from $67 million, or a loss of 22 cents per share, a year earlier. Adjusted earnings came in at a net loss of 33 cents a share. Analysts had expected a loss of 43 cents per share.
"During the third quarter, we took aggressive actions to clear slow-moving inventory, primarily allowing for an improved apparel assortment heading in to the holiday season," said Marvin R. Ellison, chairman and CEO. "While these actions had a negative short-term impact on profitability in the third quarter, we firmly believe it was the right decision for the company as we transition into the fourth quarter and fiscal 2018."
The top performing divisions during the quarter were home, Sephora, footwear and handbags, women's specialty and salon. Geographically, the Gulf Coast and Midwest were the best performing regions of the country.
On the chain's quarterly call with investors, Ellison said Penney's appliance business, an area of expansion this year, had more than doubled versus last year.
"The sales demand at appliance showrooms had opened in 2016 delivered a plus 30% comp in the third quarter," Ellison said. "We are clearly winning share in this category and excited to drive significant gains in the holiday season as well."
Another targeted area of expansion, Penney's salon services, is also up.
"Our salon business had another outstanding quarter with our continued investment to rebrand existing J.C. Penney salons to the Salon by InStyle along with improvements in technology we are committed to modernizing this very important business," he said.
Analysts had been expecting the worst: Two week ago, Penney cut its annual forecast and estimated that third quarter same-store sales would inch up 0.6% to 0.8%. But on Friday, the chain reported a 1.7% increase in same-same stores, resulting in a positive two-year stack of 0.9 %.
Penney's total net sales fell 1.8 % to $2.81 billion in the quarter, ended Oct. 28, better than analysts' estimates of $2.77 billion. The decline was attributed primarily the result of the 139 stores closed this year through the end of the third quarter.
Penney, similar to many other retailers, heavily discounted apparel in the third quarter to clear room for holiday merchandise. Those actions, combined with some other charges, took a toll on the company's profit. Penney’s net loss rose to $128 million, or a loss of 41 cents per share, from $67 million, or a loss of 22 cents per share, a year earlier. Adjusted earnings came in at a net loss of 33 cents a share. Analysts had expected a loss of 43 cents per share.
"During the third quarter, we took aggressive actions to clear slow-moving inventory, primarily allowing for an improved apparel assortment heading in to the holiday season," said Marvin R. Ellison, chairman and CEO. "While these actions had a negative short-term impact on profitability in the third quarter, we firmly believe it was the right decision for the company as we transition into the fourth quarter and fiscal 2018."
The top performing divisions during the quarter were home, Sephora, footwear and handbags, women's specialty and salon. Geographically, the Gulf Coast and Midwest were the best performing regions of the country.
On the chain's quarterly call with investors, Ellison said Penney's appliance business, an area of expansion this year, had more than doubled versus last year.
"The sales demand at appliance showrooms had opened in 2016 delivered a plus 30% comp in the third quarter," Ellison said. "We are clearly winning share in this category and excited to drive significant gains in the holiday season as well."
Another targeted area of expansion, Penney's salon services, is also up.
"Our salon business had another outstanding quarter with our continued investment to rebrand existing J.C. Penney salons to the Salon by InStyle along with improvements in technology we are committed to modernizing this very important business," he said.