J.C. Penney bucks weak retail sales trend, shares rise
(Reuters) - Department store chain J.C. Penney (JCP.N) reported stronger- than-expected quarterly same-store sales, bucking a trend of disappointing sales from peers such as Wal-Mart Stores Inc (WMT.N) and Macy's Inc (M.N).
J.C. Penney's shares were up 3.2 percent in extended trading after the company also reported a much smaller second-quarter loss that underscored a firm turnaround in its business.
Same-store sales rose 6 percent on strong demand for home goods and jewelry, topping the 5.8 percent growth analysts had forecast.
This was Penney's third straight quarter of comparable sales growth after nearly two years of declines when the struggling retailer ditched popular merchandise and promotional offers in an effort to move upmarket.
The botched move, led by former Chief Executive Ron Johnson, resulted in steep declines in sales in 2012.
Penney fired Johnson in early 2013 and has since revamped its household goods section and brought back many of its in-house brands such as Cooks and St. John's Bay.
The company was also able to boost its gross margins to 36 percent from 29.6 percent at a time when heavy discounting weighed on Wal-Mart and Macy's.
Wal-Mart, the world's biggest retailer, reported flat same-store sales in the United States on Thursday, while department store Macy's cut its full-year same-store sales forecast.
"In the second quarter, we gained additional market share while significantly increasing gross margin in a highly competitive promotional environment," Chief Executive Myron Ullman said in a statement.
The company said Ullman, who underwent a surgery related to a medical condition he had for more than 20 years, is recovering and is expected to return to work soon.
Strong sales in the final weeks of the quarter - the beginning of the back-to-school season - also helped increase revenue, the company said in its post-earnings conference call.
Penney said it expects current quarter same-store sales to increase in the mid-single digits percentage range.
Sales in the company's online business, which is also being revamped, increased 16.7 percent in the quarter.
The company's loss narrowed to $172 million, or 56 cents per share, in the second quarter ended August 2, from $586 million, or $2.66 per share a year earlier.
Sales rose to $2.79 billion from $2.66 billion.
Excluding items, the company reported a loss of 75 cents per share.
Analysts on average had expected a loss of 93 cents per share on revenue of $2.79 billion, according to Thomson Reuters I/B/E/S.
Shares of the company jumped as much as 13 percent in after-market trading but lost some of those gains trade up 3.2 percent at $10.05.
(Reporting by Ramkumar Iyer in Bangalore; Editing by Saumyadeb Chakrabarty)
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