J.C. Penney overcomes warm weather with enhanced omnichannel capabilities
Less than 12 hours after Macy’s shared bleak holiday results, J.C. Penney Co. said enhanced digital capabilities and strong demand for its private-label offerings helped it to produce strong holiday season same-store sales growth, which allowed the company to reaffirm its full year profit forecast.
J.C. Penney said same-store sales for November and December increased 3.9% on top of a prior year increase of 3.7% and confirmed that it would achieve earlier financial targets of $645 million in earnings before interest, taxes, depreciation and amortization (EBITDA) and generate positive free cash flow. Barring a major fall off in January sales, the 3.9% increase through November and December has J.C. Penney well positioned to achieve its full year outlook, which called for same-store sales growth of 4% to 5%, considering comps during the first, second and third quarters increased 3.4%, 4.1% and 6.4%, respectively.
"Despite unprecedented warm weather that significantly affected apparel sales across the company, our focus on private brands, enhanced omnichannel execution and compelling gift giving selection resulted in strong holiday sales,” said J.C. Penney CEO Marvin Ellison. “I am especially pleased with the accelerated comp sales improvement from November to December, including record online sales for the company during the holiday season.”
J.C. Penney’s affirmation that it will achieve performance targets shared early in the year is not remarkable on the surface. However, the results take on greater significance when viewed against a backdrop in which record warm temperatures throughout the holiday season cast considerable doubt about other retailers’ ability to achieve sales targets. Also making J.C. Penney’s performance noteworthy is that it comes on the heels of hugely disappointing news from Macy’s. The day before J.C. Penney’s announcement on Jan. 7, Macy’s said its November and December same-store sales declined 4.7%, worse than earlier guidance, which called for a decline of 2% to 3%, and lowered its full year profit forecast.
J.C. Penney can breathe a sigh of relief that it appears to have weathered the holiday season better than others, but Ellison noted the company’s transformation remains a work in progress as it looks to build on omnichannel progress evident during the holidays.
"Although we have much work to do, our strengthened omnichannel capabilities enabled our supply chain network to process millions of jcp.com orders this season, supported by 250 stores across the country that helped fulfill online orders using in-store inventory,” Ellison said. “With this level of selection, we saw more online customers take advantage of our in-store pick up option available at over 1,000 J.C. Penney stores nationwide. We look forward to capitalizing on this digital progress through 2016.”
The company will report its fourth quarter and fiscal 2015 results on Feb. 26.
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