FINANCE

J.C. Penney tops views in first quarter; same-store sales up 6.2%

BY Marianne Wilson

Dallas — J.C. Penney topped expectations for the first quarter, reporting a 6.2% increase in same-store sales that easily topped views. Revenue for the quarter, which ended May 3, rose to $2.80 billion, above the $2.71 billion analysts expected, up from $2.64 billion in the year-ago period.

It was the second consecutive month of same-store sales gains for Penney, and the retailer said sales improved sequentially each month within the quarter.

Penney lost $352 million for the quarter, not as much as analysts expected.

“It is clear that our efforts to re-merchandise many areas of the store and revamp our messaging to the customer are taking hold,” said CEO Myron E. (Mike) Ullman, III. “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."

Women’s and men’s apparel, home, and fine jewelry were Penney’s top performing merchandise divisions in the quarter. 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.

Penney forecast comparable sales in the second quarter to rise in the mid-single digit. It said it expects to end the year with liquidity to be more than $2 billion

Going forward, Penney will simplify its same-store sales calculation to better reflect year-over-year comparability. Certain items, such as sales return estimates and liquidation sales, will now be excluded from the company’s same store sales calculation. Under this new methodology, same-store store sales in the first quarter rose 7.4 %, which includes online sales that grew 25.7 % over the same period last year.

Penney also announced on Thursday that it has obtained a fully committed $2.35 billion senior asset-backed credit line to replace its existing $1.85 billion line, which matures in April 2016. Due to favorable market conditions, the company said it decided to pursue the 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.

"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,” Ullman said.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
FINANCE

Zales urges support for deal with Signet Jewelers

BY Marianne Wilson

Dallas — Zale Corp. on Thursday restated its support for Signet Jewelers Ltd.’s $1 billion acquisition offer, urging shareholders to support the deal despite opposition from a large investor. The deal, under which Zale stockholders would receive $21.00 per share in cash, has been unanimously approved by the Zale board of directors.

Zale’s investor TIG Advisors LLC has called the deal "grossly unfair," saying the jewelry retailers should be able to get $28.60 a share in cash and stock.

In a statement on Thursday, Zale said there is “significant risk and uncertainty” to its own turnaound plan, which was designed as a stretch plan to challenge management if the chain were it to remain independent.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
News

Resurgent JCP reports surprisingly strong sales

BY CSA STAFF

Things took a wacky turn in the retail world this week as JCPenney reported a 6.2% same store sales increase and a huge gross margin expansion while Macy’s, Kohl’s and Walmart stumbled.

JCPenney still lost money, lots of it, during the quarter ended May 3, but total sales increased 6% to $2.8 billion. The 6.2% same store sales increase the company reported was the result of sequential improvement throughout the quarter and broad-based strength across categories. The comp increase would have been even stronger had the company employed a new method of calculating results that exclude temporary impacts it plans to use going forward. For example, certain items such as sales return estimates and liquidation sales will now be excluded from same store sales calculation. Had this methodology been applied during the first quarter, JCPenney would have reported a 7.4% comp increase rather than a 6.2% gain.

In addition to a same store sales surprise, gross margins expanded by 230 basis points to 33.1% of sales from 30.8% last year despite the negative effects of clearance activity.

"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,” said JCPenney CEO Myron Ullman. “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."
Women`s and men`s apparel, home, and fine jewelry were the company`s top performing merchandise divisions in the quarter and Sephora inside JCPenney also continued its strong performance, according to the company. 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.

Lest anyone get carried away with the company’s performance, it is worth noting JCPenney was cycling against a prior year comp decline of 16.6% and it continues to report sizable losses. The operating loss during the first quarter was $247 million, which was roughly half the prior year loss of $486 million. A net loss of $352 million was worse than the prior year net loss of $348 million.

The other noteworthy development announced in conjunction with the release of first quarter results involved a new $2.35 billion credit facility to replace an existing $1.85 billion line of credit.

"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,” Ullman said.

Looking ahead, JCPenney expect a second quarter comp increase in the mid-single digits at its 1,100 stores and significant full year gross margin improvement.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...