J.C. Penney gets some rare good news

The struggling chain sees its first comparable sales increase in nearly a year. Shares rise 5% in response.

By TheStreet.com Staff Nov 7, 2013 11:24AM

This Monday, Aug. 19, 2013 photo shows the entrance to a J.C. Penney store at a Hialeah, Fla., shopping mall. On Tuesday, Aug. 20, 2013, J.C. Penney reports quarterly financial results. (AP Photo/J Pat Carter)By Laurie Kulikowski

 

TheStreet.com logoNEW YORK (TheStreet) -- Is it possible that a turnaround is happening at J.C. Penney (JCP)?

 

The Plano, Texas-based department store said that October same-store sales rose 0.9 percent, up 490 basis points from September, and the first positive comps since December 2011.

 

Sales on jcp.com jumped 37.6 percent in October from last year, "a continuation and acceleration of the positive trend in the company's online business," J.C. Penney said.

 

The retailer added that customers are responding favorably to promotional events and improved inventory levels of familiar brands as "conversion" continued to improve in October compared to last year.

 

Shares rose nearly 5 percent to $8.08 in Thursday trading.

 

"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," CEO Myron (Mike) Ullman III said in a statement. "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."

 

J.C. Penney continues to re-merchandise and reconfigure its home department both in stores and online. The changes are beginning to resonate, the company said, as its home division saw the largest percentage sales increase company-wide in October. Sales of home merchandise online were up more than 50 percent from last year and were almost half total online sales in October. The categories of women's, men's and children's apparel were also strong performers online during the month.

 

The company also opened 30 new Sephora stores inside J.C. Penney locations in October, bringing the total to 446 locations.

 

Still, the company cautioned that gross margin in the third quarter was hurt 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. However, gross margin showed sequential improvement within the quarter, with October representing the highest margin levels of the quarter.

 

J.C. Penney will report third-quarter earnings on Nov. 20.

 

"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," Ullman said. "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."

 

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30Comments
Nov 7, 2013 2:43PM
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perhaps it is because they re stocked their stores and returned to many lines that their loyal multi generational customers were happy with....like st Johns bay etc....If people want upscale they will shop at Macy's etc....JC Penney has historically been known for value and stylish yet not "edgy" merchandise.....how do I know; I worked for them all through college and they had consistent customers year after years until they attempted to be something they are not!  Happy to see they may be turning a corner! 

 

Nov 7, 2013 2:53PM
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....J.C. Penney is a quality organization.................

 

So glad to see that they improving their sales and customer traffic. They have been a strong retailer for over 100 years and deserve to get back on their financial feet. Competition is good for us...the consumers!!

 

Off to a great Christmas Season!!

Nov 7, 2013 3:19PM
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I think this Mike Ullman should thank Ron Johnson.  The numbers were so bad under him the comps had no where to go but up!  .9% is not a turnaround.  Hope the numbers continue to improve. 

 

Nov 7, 2013 3:39PM
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I really like JCP, I'll be so sad if it leaves. Especially since I live in a town where just about everything is gone.
Nov 7, 2013 3:25PM
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I think J C Penny is a great store this year-They have a nice selection of stylish and well made clothes this year at fair prices while .at the same time bringing back their traditional line which  I like so I can just  run in and grab a pair of their every day slacks. Just wish their shoes came in wide widths. They  carry women's plus sizes,why not wide width in their shoes.  Glad they came back to normal. Every one here use to go to their drapery dept,as you could always count on them having bedpads,,great curtains & blinds-keep it up-it takes a while  to rebuild
Nov 7, 2013 7:00PM
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Hopefully, Penney's will come thundering back.  Otherwise there'll be one less store to keep other stores' prices in check.  I plan on spending some money there this holiday season.
Nov 7, 2013 6:41PM
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This is great - finally JCP returns to the way it was when it was attracting customers and making money.   We have also returned to the store several times lately and have been satisfied with the store layout and the merchandise and sales.  By the way - JCP should keep Mike Ullman as CEO!!
Nov 7, 2013 6:43PM
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I am 6'5" which is tall but not so tall that I shouldn't be able to find clothes at a few select retailers who carry tall sizes.  JCPenney used to be a staple for me to find 36" length jeans, but now they carry only up to typical 34" length, like everybody else.  And that pretty much means I'm left shopping at Eddie Bauer exclusively - which sucks because I think $59 for a pair of jeans is about 3x too much.

 

JCP's tall shirts are for 350+lb T-Rexes.  Long torso with yards and yards of extra material around the waist, with itty bitty short arms.  Their Big&Tall clothing design geniuses must think anyone over 6' tall must also be a buffet bandit with the arms of an Oompa Loompa.

Nov 7, 2013 7:54PM
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As 1 of the few reasonably priced places to get tall sizes for both men and women (on-line). I would hate to see them disappear.
Nov 7, 2013 5:52PM
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They say you can interpret figures to tell any story you want to,  well Ullman is certainly playing that game. A sales increase is only good news when achieved without sacrificing margins, which JCP have patently failed to do. This company has been failing for years. Why they ever brought Ullman back after sacking him serves to demonstrate how incompetant the entire board is! Sell your shares now before they end up worthless.
Nov 7, 2013 5:26PM
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I just hope they bring the holiday buttons back this year.
Nov 7, 2013 6:30PM
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What a story about "stupidity" Beckett...Gawd, thought it would never end.
Nov 7, 2013 11:51PM
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I worked for JCP in Arizona and back then they had great bargains on clothes plus there line of clothes were  pretty good. They always had good sales at the end of every season and with my employee discount you could get some real bargains on most of there product lines. I was in loss prevention so my job was different then being in sales. I really liked working there because most of the people I worked with were ok. My boss was a women and she was the best boss I ever had. She was very smart in dealing with shop lifters and with employees who thought that they could get away with stealing from the store. Al in all JCP was ok in my book. I hope they can rebound from the loser

CEO who almost ran them into the ground. Maybe next time they will check to see who they hire to run things is qualified to be in that position.  

Nov 7, 2013 6:26PM
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George was that your brother, that got married to Bill on the Rez, this past week ??
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We won't go back , till Ellen is gone , that hack won't get none of my money.
Nov 7, 2013 4:25PM
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Their clothes are of good quality and of a fair price but recently I ordered a pair of capri's online and to get free shipping I found a pair of shoes as well.  My order total met the requirements for free shipping but I was not going to get it because the shoes were coming to me from somewhere else so I did not qualify for the free shipping.  So I did not order the shoes just the capri's which they had a sale and I got a couple of dollars off the price.  I knew that I was going to have to pay for shipping so I figured for something that weighs less than 1 pd I would probably pay between 3.00 & 5.00  (still considered high but ok)  I ended up paying 8.00 for shipping for one little flat plastic bag.  I sent a box package Fed-Ex ground the weighed 1.5 lbs that cost me 9.38.  Sorry JCP that is totally ridiculous to charge 8.00 for one small flat plastic bag. You have lost my business never again.
Nov 7, 2013 4:49PM
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Get rid of Ellen if JCP wants to stay in business!
Nov 7, 2013 3:46PM
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Sorry but this store is horrible.  I cannot believe what they have done with the bed & bath department.  Sheets, towels, etc are all over the place.  They no longer sell certain brands.
I walked in and was disgusted at what they have done to this store.  I walked out.  Never
to return again.  They took a perfectly good store and tried to turn it in to some high end
department store.  Bad move.
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