J.C. Penney Boosts Earnings But Home Operations Struggle

J.C. Penney said the company is ready for the holidays after posting strong earnings in the third quarter but initiatives in home have yet to get activity moving in the right direction.
J. C. Penney posted net income of $44 million, or 19 cents per share, for the quarter ended October 30 versus $27 million, or 11 cents per share, in last year’s third quarter, beating an average analyst’s forecast. Comparable store sales gained 1.9% year over year while total sales gained 0.2% to $4.19 billion.
Although top-line sales took a hit because of a J.C. Penney decision to drop its Big Book catalog, Mike Ulman, J.C. Penney’s CEO, said the company is well positioned for the holiday season.
“As we enter the fourth quarter and all-important holiday season, our gift assortment is better than ever, including many exciting styles under our new brands,” he said. “We expect the environment to remain highly promotional, and we have planned a robust calendar of events to ensure customers know that J.C. Penney should be their first-choice shopping destination.”
Ulman added that initiatives to boost a sagging home business had begun to gain ground. He said housewares, particularly coffee-related products, had been strong sellers in the quarter along with luggage. However, big ticket items including furniture remain a tough sell. To this point in the year, Ulman said, home comp sales are down 2%.
Internet sales, a part of the business where J.C. Penney has been a leader, struggled in the recession, but the company stated that growth initiatives had begun to gain traction and that sales gained 3% to $361 million in the third quarter
In addition to the financial results, J.C. Penney has announced a partnership with Hearst Magazines to develop new brands that will be sold online and through retail stores. The operation, developed to operate independently of J.C. Penney’s main mid-tier department store business and dubbed the Growth Brand Division, will launch with two online operations. Gifting Grace will target women from 30 to 54 with unique products suitable as presents, and CLAD will target men 25 to 54 with designer apparel.
The magazine publisher’s Hearst Brand division already has developed a Country Living program the covers home goods available in Sears and Kmart.