J.C. Penney cuts Q1 loss; goes on offensive to ‘gain back market share’

Plano, Texas -- J.C. Penney Co. topped analysts estimates for the first quarter, reporting a smaller-than-expected loss. Declaring its intent to become the “preferred shopping choice for middle America” and gain back market share, the company also raised its outlook for the year.



Penney posted a loss of $167 million in the quarter ended May 2, compared with a net loss of $352 million in the year-ago period.



Sales, however, fell just short of expectations, coming in at $2.86 billion, versus the consensus estimate of $2.87 billion, from $2.80 billion a year ago. Same-store sales rose 3.4%



"We are pleased with the company's solid performance this quarter across all key metrics including sales, gross margin and EBITDA,” said Penney CEO Myron E. (Mike) Ullman. “This year we are switching gears, going on the offensive to gain back share and grow our business profitably while executing our vision to become the preferred shopping choice for Middle America.”



For the quarter, women's apparel, men's and home were the company's top performing merchandise divisions. Sephora inside J.C. Penney, now available in 515 locations, also continued its strong performance. Geographically, all regions experienced sales growth when compared to the same period last year with the best performance in the western and central regions of the country.



Marvin Ellison, president and CEO-designee (he takes the reins on Aug. 1) noted it is clear “that our strategic initiatives are working to drive profitable sales growth.”



“Our exceptional customer experience, when combined with our strength in private brands, national brands and points of differentiation like Sephora inside J.C. Penney and the Disney Collection, give us confidence in our ability to earn customer loyalty and deliver on our long term goals,” he said. “In fact, based on our results to date, including a strong Easter and Mother's Day, we feel confident in raising our 2015 expectations for sales, gross margin and SG&A."



Looking ahead to 2015, the company expects same store sales to increase 4% to 5% versus 3% to 5% previously. It expects gross margin to improve 100 to 150 basis points up from 50 to 100 basis points previously. And it expects EBITDA of approximately $600 million.