J.C. Penney Company, Inc. reported that its same store sales increased 6% in the second quarter, the third consecutive quarter of growth. It noted Home as one of the top performing merchandise divisions in the quarter.
Among other noted highlights, its gross margin improved 640 basis points from the same quarter last year and 290 basis points sequentially from the first quarter of 2014. Its EBITDA was $90 million, a $342 million improvement from last year. Net income improved 71% versus same quarter last year. Free cash flow was $76 million, a $1.2 billion improvement from last year.
Mike Ullman, CEO, said, “Our turnaround initiatives continue to produce improved financial results. In the second quarter, we gained additional market share while significantly increasing gross margin in a highly competitive promotional environment.”
Ullman continued, “Our customers know they can count on JCPenney to deliver relevant stylish merchandise at a price that fits their budget. With our unique assortment of powerful private brands, key national brands and exclusive attractions— all at prices customers can afford— we expect to continue driving profitable sales this back to school season. As we approach the completion of our turnaround, we are focused on reestablishing JCPenney as the premier shopping destination for the moderate consumer.”
For the second quarter, JCPenney reported net sales of $2.80 billion compared to $2.66 billion in the second quarter of 2013. Same store sales increased 6% for the quarter. Online sales through jcp.com were $249 million for the quarter, up 16.7% versus the same period last year.
Women’s and men’s apparel and accessories, Home and Fine Jewelry were the company’s top performing merchandise divisions in the quarter. Sephora inside JCPenney also continued its strong performance. Geographically, all regions delivered sales gains over the same period last year with the best performance in the southern and western regions of the country.
For the second quarter, gross margin was 36% of sales, compared to 29.6% in the same quarter last year, representing a 640 basis point improvement. Gross margin improved sequentially throughout the quarter and was positively impacted by improvement in the company’s clearance sales performance, according to the announcement.
Inventory was $2.848 billion, down 9.7% compared to the same quarter last year. The company noted it is pleased with the level, content and currency of its inventory.
Operating income for the quarter was a loss of $70 million which represents a $325 million or 82% improvement over last year. EBITDA was $90 million, a $342 million improvement from the same period last year. For the second quarter, the company incurred a net loss of $172 million or 56 cents per share.
The company’s outlook for the third quarter is as follows: its comparable store sales are expected to increase mid-single digits; its gross margin is expected to be in-line with second quarter of 2014; and its SG&A expenses are expected to be slightly above last year’s levels.