NEW YORK -- J.C. Penney delivered some encouraging news Friday: It reported a solid rise in sales at established stores, reversing four-straight quarters of declines. It also posted a smaller-than-expected loss for the third quarter, all news that sent its shares soaring.
The news stanched, at least for a moment, an extended sell-off in company shares, which accelerated last month when the Plano, Texas-based chain warned that it would be forced to liquidate poor-selling merchandise. Shares, which have tumbled 67 percent this year, had touched an all-time low.
Initiatives to spiff up its clothing lines to fuel sales are "giving us confidence that our overall strategy and transformation is beginning to take hold," Chief Executive Officer Marvin Ellison said in a release Friday. He said by selling off unwanted merchandise, the company is entering the Christmas season with less of a backlog so it can add fresh items to its floors.
Penney's performance was a bright spot in a mixed bag of results from department stores, which released their reports this week. Yet more challenges lie ahead with the critical Christmas shopping season.
Macy's reported on Thursday that sales fell at established stores in the third quarter, marking the 12th-straight quarter of declines, as it had a hard time pulling shoppers through its doors. Kohl's reported a drop in quarterly profits Thursday, although it saw rising sales in the quarter. Even Nordstrom, which announced results after the bell on Thursday, saw a key sales measure fall and trimmed its outlook.
As with many retailers, department stores have wrestled with weak sales as customers go online. Department stores, which are heavily dependent on clothing sales, are seeing more competition there as Amazon expands further into fashion and off-price chains such as T.J. Maxx add more stores.
J.C. Penney, though, had extra challenges in restoring sales after a disastrous attempt to reinvent the company under former Apple executive Ron Johnson. The company has since brought back large appliances such as dishwashers and has expanded its in-store Sephora beauty shops to be in 75 percent of its locations.
This Christmas season, the company is creating toy shops in its stores and is opening an hour earlier than last year on Thanksgiving. The 2 p.m. opening is earlier than its rivals Kohl's and Macy's.
Ellison said the chain is trying to operate as a more "modern company" in a vastly changing landscape -- and, in many cases, it's playing catch-up. Ellison acknowledged to analysts on a call Friday that J.C. Penney was behind in chasing the active and casual clothing trend, and is using analytics to understand shoppers' behavior. It's now expanding those merchandising areas in the store and is highlighting them.
The company has also centralized its pricing strategy and last week eliminated the position of chief merchant, once a lofty role, as it said that it wants to have a less-hierarchal structure to move faster.
"Our merchandising structure was virtually the same structure that we had 20 years ago," Ellison said. "We're competing against e-commerce companies that don't have chief merchants, don't even have category merchants. They're just moving fast with data."
J.C. Penney Co. reported a loss of $128 million, or 41 cents, for the quarter. That compares with a loss of $67 million, or 22 cents per share, a year earlier. Losses, adjusted for one-time gains and costs, came to 33 cents per share, or a dime better than analysts polled by Zacks Investment Research had expected.
Last month, the company had said it expected a per-share loss of between 40 and 45 cents for the quarter.
Revenue was $2.81 billion, also exceeding Wall Street forecasts for $2.76 billion. Revenue at stores open at least a year rose 1.7 percent.
J.C. Penny stuck to its forecast of per-share profits of between 2 and 8 cents for the year, way down from an earlier outlook of between 40 cents to 65 cents.
Shares rose nearly 13 percent, or 34 cents, to $3.09 in Friday trading. A year ago, they were at $8.36.
Business on 11/11/2017
Print Headline: J.C. Penney bright spot among retailers