JCPenney ekes out operating profit as sales contract again
The Home and Kids divisions were strong performers during the Back-to-School season.
PLANO, Texas—JCPenney’s top–line weakness continued during the third quarter, although traffic trends improved during the Back-to-School season.
The company made strategic investments in inventory to support the BTS and holiday selling season for the quarter, which ended Nov. 2. The Home and Kids divisions were both strong performers during the back-to-school period as the department store chain improved in-stocks and merchandise assortments while dialing up its value messaging.
The launch of Penney’s celebrity-driven “Really Big Deal” promotional advertising on Thursday Night Football exceeded expectations for top-line impact. By the time it concludes in late December, the 16-week campaign is expected to draw in more than 2 million new customers, boost shopping trip frequency and significantly increase brand awareness as measured by social media impressions and engagement.
“In the quarter, the company’s rewards program signups increased by nearly 25% year-over-year with customers earning and redeeming rewards at much faster rates,” JCPenney Intermediate Holdings reported in its Q3 financial filing.
Retail sales, which do not include credit card and other revenues, fell 8% to $1.4 billion. Operating profit blipped into positive territory, coming in a $2 million compared to an operating loss of $10 million in last year’s Q3.
Gross profit rates improved slightly to 38.7% vs. compared to 38.5% last year. Net loss narrowed to $17 million compared to $30 million in the year-ago quarter.
JCPenney ended the quarter with approximately $1.4 billion in liquidity.
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