JCPenney Reports a 1.5 Precent Increase in Total Net Sales for hte Second Quarter 2017

J. C. Penney Company, Inc. (NYSE: JCP) today announced financial results for its fiscal second quarter ended July 29, 2017.  Total net sales increased 1.5 % to $3.0 billion in the second quarter compared to $2.9 billion in the same period last year.  Comparable sales declined (1.3) % for the second quarter, resulting in a positive two-year stack of 0.9 %.

Marvin R. Ellison, chairman and chief executive officer said, “We are pleased to deliver a top line sales increase of 1.5 % and quarterly sequential improvement of 220 basis points in our comp sales performance in go forward stores.  While broader retail remains challenged, we are encouraged by the improved performance in our total apparel business, including a significant acceleration in kids’ apparel.  Nearly all categories delivered improved sales results during the quarter, with our growth initiatives in beauty, home refresh and omnichannel continuing to deliver positive sales growth.”

Ellison continued, “During the second quarter, we liquidated inventory in 127 of our closing stores which had a negative impact on gross margin and EPS. These events were isolated to the second quarter.  As such, we are reaffirming our EPS guidance for the year, and remain confident in our ability to further strengthen our balance sheet, while driving sustainable growth and long-term profitability for JCPenney. To that end, we are pleased that we are off to a strong start in August for the all-important back to school season.  We are excited by this momentum and expect to deliver improved results in the back half of the year.”

Home, Fine Jewelry, Footwear and Handbags, Sephora and Salon were the Company’s top performing divisions during the quarter. Geographically, the Southwest and Southeast were the best performing regions of the country.

For the second quarter, cost of goods sold, which excludes depreciation and amortization, was $1.9 billion, or 64.9 % of sales, compared to $1.8 billion, or 62.9 % of sales in the same period last year. This increase was primarily driven by the liquidation of inventory in closing stores.

SG&A expenses for the quarter declined $11 million to $842 million, or 28.4 % of sales, and leveraged 80 basis points as a percentage of sales compared to the same period last year.  These savings were primarily driven by reductions in store controllable costs and corporate overhead and an increase in private label credit card income.

For the second quarter, the Company’s net loss was ($62) million, or ($0.20) per share, compared to a net loss of ($56) million, or ($0.18) per share in the same period last year.

Adjusted net loss was ($28) million, or ($0.09) per share, for the second quarter this year compared to an adjusted net loss of ($16) million, or ($0.05) per share, last year.
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