Plano, TX—JCPenney today posted better better-than-expected third quarter sales, helped by demand for home, footwear, handbags and a strong performance by the Sephora shops in its stores.
For the three months ended Oct. 31, the department’s net loss narrowed to $137 million, or 45 cents a share, from $188 million, or 62 cents a share, a year earlier.
Net sales rose 4.8% to $2.90 billion. Comp store sales rose 6.5%, its biggest increase in more than 9 years.
Analysts had expected revenue of $2.88 billion, according to Thomson Reuters.
“The continuation of our strong sales performance this quarter demonstrates ongoing progress towards achieving the company`s long-term financial targets. We grew the top line, improved margin and intensified our expense discipline,” said CEO Marvin Ellison. “As we look ahead to the fourth quarter, we are well positioned to compete effectively during the key holiday shopping period thanks to the hard work and dedication of all our associates. While there is significant work to do to improve our company, the JCPenney team remains determined to regain our status as a world-class retailer.”
.JCPenney’s outlook for the year is for comparable store sales are expected to increase 4% to 5%, gross margin is expected to improve 100 to 150 basis points and free cash flow is expected to be break-even. The consensus estimates for the full fiscal year are a net loss of $1.21 a share on $12.6 billion in revenue.
Compared to many of its department store competitors, JCPenney has outperformed the market. Its stock up over 35% year to date. However, over the past 52 weeks the stock is only up about 13%.
Lawsuit Over Fake Discounts
JCPenney said Wednesday that it will make available $50 million to settle a class-action lawsuit that accused the retailer of “hoodwinking customers into thinking they were getting big discounts on certain items.”.
The lawsuit was filed in 2012 on behalf of California customers who purchased private-label and exclusive branded products between November 2010 and January 2012.
Plaintiffs claimed that JCPenney routinely marked down items from an inflated fake price that was never really in effect. Similar lawsuits have been filed against other retailers.
“While we are confident of our position, resolving this litigation removes any uncertainty and risk, which we believe is in the best interest of our shareholders,” Ellison said..