J. C. Penney Company, Inc. (NYSE: JCP) (the “Company”) today reported that it continues to make meaningful progress in its turnaround and provided an update on the Company’s performance. Preliminary highlights include:
- ˙ Same store sales increased 0.9 % in October, marking a 490 basis point increase over September
- ˙ Sales on jcp.com increased 37.6 % versus last year, a continuation and acceleration of the positive trend in the Company’s online business
- ˙ Conversion continues to improve in October compared to last year, reflecting favorable customer response to promotional events and improved inventory levels
“JCPenney has made significant progress in addressing the challenges it faces, and we believe the Company is on the right track to return to long–term profitable growth,” said Myron E. (Mike) Ullman, III, Chief Executive Officer of JCPenney. “We are proud of our October sales improvement, which we achieved despite the federal government shutdown and a challenging consumer environment. Not only did we deliver positive same store sales for the first time since December of 2011, we also saw significantly improved sales trends in Home and Men’s apparel, as well as Women’s accessories.”
JCPenney is a Better Place to Shop
The Company attributes its improved sales trends to the restoration of inventory levels in key private brands, including St. John’s Bay®, Stafford®, and jcp Home™, and significant sales increases in Levi’s®, Nike®, Carter’s®, Dockers®, Alfred Dunner®, Vanity Fair® and IZOD®, some of the Company’s largest national brands. The Company also continues to make strides in the remerchandising and reconfiguration of its Home department both in stores and online to better reflect how customers shop while highlighting its most compelling brands and price points. These changes are beginning to resonate, as Home saw the largest percentage sales increase among the Company’s divisions in October.
The Company is encouraged by the performance of jcp.com, which was up 37.6 % in October, continuing and accelerating the positive trend of the last several months across all merchandise divisions. Sales of Home merchandise online were up over 50 % from last year. Overall, sales in Home categories constituted almost half of the total .com sales in October. Women’s, Men’s and Children’s apparel were also strong performers online during the month, with Children’s benefiting from the Company’s launch of Disney toys, role play and fashion apparel for kids.
The Company also opened 30 new Sephora inside JCPenney locations in October, bringing the total to 446 locations.
Overall, gross margin for the third quarter was negatively impacted by lower clearance margins due to the overhang of inventory from the first two quarters of the year, higher levels of clearance units sold, as well as the Company’s transition back to a promotional pricing strategy. The Company noted, however, that gross margin showed sequential improvement within the quarter, with October representing the highest margin levels of the quarter.
Mr. Ullman continued, “As the turnaround is progressing, we are focused on restoring a compelling mix of private, exclusive and national brand merchandise that better resonates with our customer and results in fewer markdowns at the end of the selling season.”
Reconnecting with the Customer
For the month of October, conversion improved from the same period last year, due in large part to the Company’s focus on restocking the items customers expect to find at JCPenney, as well as the return of key promotional marketing events. The Company reported that while average unit retail and overall traffic fell below last year’s levels, the average transaction value and units per transaction in October were up from last year.
Mr. Ullman concluded, “The success we’ve had to date in reconnecting with our customers is energizing the teams throughout our organization, enabling us to achieve customer service scores that are at an all–time high for the Company. As we look ahead, we are fully prepared to execute our aggressive plans for the holidays, including opening at 8:00 pm on Thanksgiving Day. We will soon be unveiling new marketing to better communicate the unique value and stylish merchandise assortment we offer. We expect the holiday season to be extremely competitive, and we are ready to win.”