J.C. Penney surprises in Q3
J.C. Penney gave its investors — and the retail industry — some good news on Friday, topping Street estimates and reporting better than expected sales for its third quarter.
Analysts had been expecting the worst: Two week ago, Penney cut its annual forecast and estimated that third quarter same-store sales would inch up 0.6% to 0.8%. But on Friday, the chain reported a 1.7% increase in same-same stores, resulting in a positive two-year stack of 0.9 %.
Penney’s total net sales fell 1.8 % to $2.81 billion in the quarter, ended Oct. 28, better than analysts’ estimates of $2.77 billion. The decline was attributed primarily the result of the 139 stores closed this year through the end of the third quarter.
Penney, similar to many other retailers, heavily discounted apparel in the third quarter to clear room for holiday merchandise. Those actions, combined with some other charges, took a toll on the company’s profit. Penney’s net loss rose to $128 million, or a loss of 41 cents per share, from $67 million, or a loss of 22 cents per share, a year earlier. Adjusted earnings came in at a net loss of 33 cents a share. Analysts had expected a loss of 43 cents per share.
“During the third quarter, we took aggressive actions to clear slow-moving inventory, primarily allowing for an improved apparel assortment heading in to the holiday season,” said Marvin R. Ellison, chairman and CEO. “While these actions had a negative short-term impact on profitability in the third quarter, we firmly believe it was the right decision for the company as we transition into the fourth quarter and fiscal 2018.”
The top performing divisions during the quarter were home, Sephora, footwear and handbags, women’s specialty and salon. Geographically, the Gulf Coast and Midwest were the best performing regions of the country.
On the chain’s quarterly call with investors, Ellison said Penney’s appliance business, an area of expansion this year, had more than doubled versus last year.
“The sales demand at appliance showrooms had opened in 2016 delivered a plus 30% comp in the third quarter,” Ellison said. “We are clearly winning share in this category and excited to drive significant gains in the holiday season as well.”
Another targeted area of expansion, Penney’s salon services, is also up.
“Our salon business had another outstanding quarter with our continued investment to rebrand existing J.C. Penney salons to the Salon by InStyle along with improvements in technology we are committed to modernizing this very important business,” he said.
Nordstrom profit up but a key metric falls
Nordstrom Inc. swung to a profit in its third quarter and topped expectations, but its same-store sales fell as hurricanes affected store traffic in Puerto Rico, Florida, and Texas.
The department store retailer earned $114 million, or 67 cents a share, for the quarter ended Oct. 28, versus a loss of $10 million, or 6 cents a share, in the year-ago period. Analysts had expected earnings of 64 cents. The estimated reduction in earnings from hurricanes affecting the company’s stores in was approximately $0.04.
Total company net sales rose 2% to $3.5 billion, slightly below forecasts. Total company same-store sales fell 0.9%, more than expected. The estimated lost sales impact from the hurricanes was approximately $20 million.
Same-store sales fell 1.9% at Nordstrom. The top-ranking merchandise categories were men’s apparel and kids’ apparel. The West was the top-ranking U.S. geographic region. Same-store sales rose 0.8% at Nordstrom Rack.
Nordstrom operates 366 stores in 40 states, including 122 full-line stores in the United States, Canada and Puerto Rico; 232 Nordstrom Rack stores; two Jeffrey boutiques; two clearance stores; seven Trunk Club clubhouses; and its Nordstrom Local service concept.
Office Depot Q3 tops estimates; completes key acquisition
Office Depot on Thursday posted profit and revenue ahead of estimates and announced a “milestone” in its transformation to a business-services driven operation.
The company said it has completed its acquisition of CompuCom Systems, a provider of technology services, products and solutions.
“Together, this combination will create a unique nationwide omnichannel offering in office supplies and end-to-end technology solutions focused on business customers,” Office Depot stated. “The combined company expects to be well positioned to capture market share in the $25 billion, highly fragmented North American managed workplace service market by providing a comprehensive network of enterprise-level tech services and products to new and existing customers of all size.”
Office Depot’s net income totaled $92 million, or 17 cents a share, in the quarter ended Sept. 30, down from $193 million, or 35 cents a share, in the year-ago period. Adjusted per-share earnings were 19 cents, ahead of the 13 cents FactSet consensus.
Sales fell to $2.62 billion, down from $2.83 billion. Sales in the retail division totaled $1.3 billion, compared to $1.5 billion in the prior year period. The company attributed the decline to the impact of planned store closures over the past twelve months, hurricane impacts and a 5% decline in comparable store sales in the quarter versus the prior year.
Earlier this week, Office Depot announced the launch of BizBox, a business services platform designed to start-ups and small business leaders access to the core services needed to start and grow their businesses through a convenient, monthly subscription.
“Our new strategy is focused on building diverse and stable recurring service offerings that leverage our omnichannel platform, but most importantly it was created by listening to our customers and the solutions they need in order to run their businesses,” commented CEO Gerry Smith. “We are moving quickly to make the necessary investments to successfully deliver on the strategy and believe it can ultimately unlock significant value to our shareholders as we position Office Depot for the future.”