J.C. Penney Delivers Second Consecutive Quarter Of Comp Store Sales Growth

J.C. Penney Company, Inc., in announcing its financial results for its first quarter ended May 3, 2014, noted that same store sales were up 6.2%. Home was one of the retailer’s top performing merchandise divisions in the quarter, it reported

Mike Ullman CEO said, “We are very pleased to report that JCPenney delivered its second consecutive quarter of comparable store sales growth, as well as continued gross margin improvement. It is clear that our efforts to re-merchandise many areas of the store and revamp our messaging to the customer are taking hold.”

Ullman added: “Despite a difficult retail environment, our strong performance during the Easter holiday period and other key promotional events enabled us to deliver better than anticipated sales results. We expect to carry this momentum into the second quarter as we continue to position the company for long-term profitable growth.

For the first quarter, JCPenney reported net sales of $2.8 billion compared to $2.64 billion in the first quarter of 2013. Same store sales increased 6.2% and improved sequentially each month within the quarter.

Women’s and Men’s apparel, Home, and Fine Jewelry were the company’s top performing merchandise divisions in the quarter. Sephora inside JCPenney also continued its strong performance, the company reported. Geographically, all regions delivered sales gains over the same period last year with the best performance in the western and central regions of the country.

For the first quarter, gross margin was 33.1% of sales, compared to 30.8% in the same quarter last year, the company reported. While better than last year, gross margin was negatively impacted by an increase in clearance sales as a percentage of total sales in February and March, as well as negative clearance margins. Gross margin improved sequentially throughout the quarter, and the clearance sales mix returned to historic levels by quarter end.

The company also announced that it has obtained a fully committed and underwritten $2.35 billion senior secured ABL credit facility to replace its existing $1.85 billion ABL bank line, which matures in April 2016. Due to favorable market conditions, the company decided to pursue this new facility proactively to extend the maturity several years and enhance its liquidity position. This financing is expected to provide better pricing terms and is expected to add $500 million of incremental liquidity during peak seasonal needs.

Ullman continued, “With a solid plan in place to complete the turnaround, we are pleased with the support of our banking partners and their confidence in our ability to succeed.”