J.C. Penney narrows loss as rebuilding progresses

J.C. Penney Co. continues to make progress in its turnaround efforts as its narrowed its second quarter loss and posted a gain in same-store sales even as Macy’s and Kohl’s posted declines.



The retailer also reaffirmed its full year forecast of a 3%- to 4% increase in same-store sales.



It’s been a busy few months for Penney, which has been opening expanded appliance departments and testing in-store partnerships with Ashley Furniture and Empire Today.



"We are excited about the initiatives we have in place to drive incremental growth in the back half of the year with our appliance rollouts, new Sephora locations, center core refreshes, in-store .com fulfillment and our chain wide rollout of buy online, pick up in store same day,” said Penney CEO Marvin R. Ellison.



Penney posted a net loss of $56 million for the quarter ended July 30, or 18 cents a share, compared with a loss of $117 million, or 38 cents a share, in the year-ago period.



Total sales rose 1.5% to $2.92 billion, slightly short of expectations. Same-store sales increased 2.2%.



The company’s top-performing divisions were its in-store Sephora shops, home, footwear and handbags. Geographically, the Ohio Valley and Pacific were the best performing regions of the country.



Penney’s SG&A expenses for the quarter decreased $48 million to $853 million, or 29.2 % of sales, representing a 210 basis point improvement from last year. The saves were primarily driven by lower corporate overhead, incentive compensation, store controllable costs and more efficient advertising spend.



“We are pleased with the sequential improvement we achieved throughout the second quarter, and our solid performance across all key metrics is encouraging,” said Ellison. “We exceeded our profitability expectations, achieving an $85 million or 59 % increase in EBITDA to $229 million for the quarter.”



Penny also announced an upcoming new store at Inland Center, in San Bernardino, California, and the relocation of its store in Salinas, California to a new space within Northridge Mall. The new store and relocation are both landlord funded projects, and are expected to be complete this fall.