JCPENNEY SEES SURPRISING GAINS IN THIRD QUARTER, STOCK SURGES
Texas-based department store chain J.C. Penney surprised Wall Street on Friday, but not in the way investors had come to expect: The beleaguered department store chain reported an increase in a key measure of sales that was greater than anticipated, causing its stock to surge. JCPenney’s stock was up as much as 19.6 percent, to $3.29 a share, in morning trading. A year ago, shares were trading above $9.
The retailer reported today that its comparable sales — those at stores open at least a year — rose 1.7 percent in the third quarter compared with the same period a year ago, more than double analysts’ expectations and the company’s own forecast last month.
However, total net sales decreased 1.8 percent to $2.81 billion in the third quarter compared to $2.86 billion in the same period last year, primarily the result of the 139 stores closed this year through the end of the third quarter.
“During the third quarter, we took aggressive actions to clear slow-moving inventory, primarily allowing for an improved apparel assortment heading into the Holiday season,” said Marvin R. Ellison, chairman and chief executive officer. “While these actions had a negative short-term impact on profitability in the third quarter, we firmly believe it was the right decision for the Company as we transition into the fourth quarter and fiscal 2018.”
Ellison continued, “We are encouraged that we delivered positive sales comps for the third quarter. Our growth strategies and new apparel initiatives led to sequential comp sales improvement in nearly all merchandise categories in the third quarter, giving us confidence that our overall strategy and transformation is beginning to take hold. While we have more work to do, we remain focused on two critical factors – to operate the business for growth and deliver positive earnings. We’re committed to making the right strategic decisions to ensure we are providing our customers more reasons to shop and experience JCPenney.”
Home, Sephora, footwear and handbags, women’s specialty and salon were the company’s top performing divisions during the quarter. Geographically, the Gulf Coast and Midwest were the best performing regions of the country.
