J.C. Penney Posts Q3 Net Sales Loss, Strong Online Growth

J.C. Penney Company, Inc. has announced financial results for its fiscal third quarter ended November 2, 2013. According to the company, in the third quarter, it achieved positive comparable store sales in October, comparable store sales and gross margin improved sequentially throughout the quarter, and sales on jcp.com increased 24.5% for the quarter. The retailer also repaid $200 million from revolving credit facility and opened 30 new Sephora boutiques inside JCPenney locations, bringing the total to 446.

For the third quarter, JCPenney reported net sales of $2.78 billion compared to $2.93 billion in the fiscal third quarter of 2012. Comparable store sales declined 4.8% for the quarter, which represented a sequential improvement of 710 basis points when compared to the second quarter of fiscal 2013. The quarter ended with a positive 0.9% comparable store sales gain in October. In addition, sales results improved sequentially each month within the quarter. Online sales through jcp.com were $266 million for the quarter, up 24.5% versus the same period last year and reflecting sequential increases through the quarter.

Mike Ullman, CEO of JCPenney, said, “Our strategies to reconnect with customers are beginning to take hold, and this became increasingly clear as the quarter progressed. This is the result of the tremendous efforts of the associates across our company to restore the merchandise customers want and deliver an unmatched shopping experience. We are proud of the company’s October sales performance, encouraged by the early weeks of November, and believe we are making strides toward a path to long-term profitable growth.”

For the third quarter, gross margin was 29.5% of sales, compared to 32.5% in the same quarter last year. Gross margin for the third quarter was negatively impacted 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 as compared to last year’s strategy. Notwithstanding, gross margin did improve sequentially throughout the quarter.

Ullman continued: “The spirit and determination of our associates has enabled us to maintain our momentum going into the fourth quarter. We are committed to building on our progress by winning this holiday season. The continued strong support of our domestic and international suppliers has helped ensure our merchandise assortment is outstanding. Furthermore, our new marketing campaign, which launched this week, will help remind customers that JCPenney is the destination for great holiday gifts that fit their budget.”