ShareThis Page
Business Headlines

JC Penney is the bright spot for retail this week

| Friday, Nov. 10, 2017, 11:00 a.m.
This Monday, Aug. 19, 2013, file photo shows a J.C. Penney store in Pembroke Pines, Fla. J.C. Penney Co. Inc. reports earnings Friday, Nov. 10, 2017.
This Monday, Aug. 19, 2013, file photo shows a J.C. Penney store in Pembroke Pines, Fla. J.C. Penney Co. Inc. reports earnings Friday, Nov. 10, 2017.
In this Friday, March 17, 2017, file photo, shoppers exit a J.C. Penney store in the Georgia Square Mall in Athens, Ga. J.C. Penney Co. Inc. reports earnings Friday, Nov. 10, 2017.
In this Friday, March 17, 2017, file photo, shoppers exit a J.C. Penney store in the Georgia Square Mall in Athens, Ga. J.C. Penney Co. Inc. reports earnings Friday, Nov. 10, 2017.

NEW YORK — J.C. Penney delivered some encouraging news: It reported a solid rise in sales at established stores Friday, 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 selloff 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,” CEO Marvin Ellison said in a release Friday. He noted that by selling off unwanted merchandise, the company is entering the holiday 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 holiday 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 profit Thursday, though 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.

Like 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 like 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 major appliances like dishwashers and has expanded its in-store Sephora beauty shops to be in 75 percent of its locations.

This holiday 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 says 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 in visible areas.

The company has also centralized its pricing strategy and last week eliminated the position of chief merchant, once a lofty role, as it says 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.

TribLIVE commenting policy

You are solely responsible for your comments and by using you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

click me