J. C. Penney Company, Inc. announced financial results for its second quarter ended July 30, 2016. While delivering a smaller-than-expected loss (a 52% improvement in net loss over the prior year to $(56) million or $(0.18) per share), earnings still fell short of expectations.
Comparable sales increased 2.2 % for Q2, delivering a two-year stack of 6.3% but a Thomson Reuters estimate expected the company to post a 2.4% gain. That metric turned slightly negative in the first quarter, following nine quarters of flat or positive results, according to CNBC.
Marvin R. Ellison, chairman and chief executive officer, said, “We are pleased with the sequential improvement we achieved throughout the second quarter, and our solid performance across all key metrics is encouraging. We are continuing to win market share and improve the bottom line of our business thanks to the commitment and hard work of our over 100,000 associates. We are excited about the initiatives we have in place to drive incremental growth in the back half of the year with our appliance rollouts, new Sephora locations, center core refreshes, in-store .com fulfillment and our chain wide rollout of buy online, pick up in store same day.”
TOP PERFORMERS: HANDBAGS AND SHOES
For the quarter, Sephora, Home, and Footwear and Handbags were the Company’s top performing divisions. Geographically, the Ohio Valley and Pacific were the best performing regions of the country.
“When I look across our categories we’re encouraged to see sequential improvement in each area including marked improvement in our women’s apparel and jewelry businesses following a very tough first quarter,” said Ellison on an analyst call. “Second, our footwear and handbag business delivered strong comp sales performance during the quarter. Not only is our expansion to women’s shoes and our relocation of men’s shoes continuing to reap benefits, we also continue to see strong response from the re-launch of our Liz Claiborne assortment of handbags. And as many of you have probably seen in our stores we’ve gone back and converted the majority of our women’s shoe area to open sale. Based on this change, we saved payroll and delivered accelerated sales results in women’s footwear.”
The Company reaffirms its 2016 full year guidance as follows:
- Comparable store sales: expected to increase 3% to 4%;
- Gross margin: expected to increase 10 to 30 basis points;
- SG&A dollars: expected to decrease versus 2015;
- EBITDA1: expected to be $1 billion;
- Adjusted earnings per share1: expected to be positive;
- Free cash flow1: expected to improve versus 2015.