DALLAS — J.C. Penney reported a better second quarter than analysts expected, narrowing its loss and posting a 4.1 percent same-store sales increase. Its stock traded higher after an upbeat conference call with analysts Friday morning to review results.
CEO Marvin Ellison said he expects current quarter sales to grow faster than they did during the second quarter. Chief Financial Officer Ed Record reaffirmed the company’s plan for full-year sales to increase in the range of 4 percent to 5 percent.
No specifics were provided about August sales, but Ellison said, so far, the company is pleased with back-to-school sales. And during the second quarter, shoppers continued that “appointment shopping” trend of spending most during key times such as Mother’s Day, Father’s Day and the Fourth of July, he said.
Ellison said Penney is still playing catch-up on multiple fronts.
Known for his store operations background from his time at Home Depot, Ellison said Penney can improve profitability by continuing to work on its online and store integration and increasing the merchandise mix online.
Stores also need to do a better job of having the right sizes and colors in stock, he said.
He called Penney’s assortment online the most conservative among peers. There’s opportunity to sell more goods online, beyond what’s presented in its stores, he said.
Several times during the conference call, Ellison referenced Penney’s “omnichannel capabilities” improving with the hiring of Michael Amend, who became executive vice president of omnichannel this month. Amend comes to Penney from Home Depot where he was vice president of online, mobile and omnichannel and worked with Ellison.
Asked about efforts in retail to raise wages, Ellison said no Penney employee makes minimum wage. Another analyst asked whether Penney knows what it wants to be.
Chief marketing officer Mary Beth West is taking an approach of asking the customers what they want Penney to be instead of company executives sitting around a table trying to decide, Ellison said. Penney needs to design its business around the demographic it’s best suited for, he said.
One of Ellison’s big goals is to get more spending out of the 87 million customers Penney has now, and one way will be with a better loyalty program that’s coming next year, he said.
During the second quarter, men’s, home, Sephora and fine jewelry led the store as top performing merchandise categories with Sephora gains in the double-digits. All geographic regions had sales gains with stores in the west and central regions performing best.
The Plano-based retailer posted a net loss of $138 million, or 45 cents a share, in the quarter that ended Aug. 1, compared with a loss of $172 million, or 56 cents a share, a year ago.
Total sales increased 2.7 percent from $2.80 billion a year ago to $2.89 billion. Same-store sales, or sales that exclude new and closed stores over the past 12 months, were up 4.1 percent and better than results also reported this week from Macy’s, Kohl’s and Dillard’s.
Analysts had expected Penney to report a loss of 48 cents a share. Analysts surveyed by Thomson Reuters also forecast a 2.2 percent increase in total sales.
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