J.C. Penney's loss smaller than expected, shares soar 13%
Reuters
Published Nov 15, 2019 10:06AM ET
J.C. Penney's loss smaller than expected, shares soar 13%
By Nivedita Balu and Melissa Fares
(Reuters) - J.C. Penney Co Inc (N:JCP) on Friday reported a smaller-than-expected quarterly loss on lower ad spending and higher margins, results Chief Executive Jill Soltau said showed efforts to revive sales and profits at the department store are taking hold.
Shares of the Plano, Texas-based company were trading up nearly 13% at $1.24 before the bell on Friday.
The 117-year-old retailer, one of the worst-hit by the surge in online shopping in the past decade, has been desperate to attract modern shoppers. In August, it partnered with resale clothing company thredUP, adding second-hand women's clothing and handbags to its merchandising mix.
It is also testing a new store to attract customers with everything from a yoga studio, a videogame lounge and lifestyle workshops.
Such efforts are a part of Soltau's turnaround strategy, aimed at reassuring investors it can lure back shoppers into stores amid fierce competition from online giants like Amazon.com Inc (O:AMZN) and discount retailers like TJX Cos Inc's (N:TJX) Marshalls and T.J. Maxx chains.
"We are beginning to see results – both in our numbers and how we operate as a business," Soltau said in a statement on Friday.
Soltau, hired late last year from craft and fabrics seller Jo-Ann Stores, is attempting to restore Penney's roots as a retailer of mid-priced apparel for middle-class families.
Soltau also pushed to stop sales of appliances and limit its furniture offerings, while reducing inventory at stores to boost margins and closing underperforming outlets.
Retail traffic data from analytics firm Placer.ai showed traffic turned positive in August, rising 13.3% above the baseline for the period, above the 7.3% rise in 2018.
J.C. Penney's rivals, including Macy's (N:M) and Nordstrom Inc (N:JWN), are also looking to bring in shoppers to new stores with cafes, donut shops, fine-dining restaurants and full bars with Instagrammable views.
Excluding one-time items, J.C. Penney reported a loss of 30 cents per share, narrower than the average analyst estimate of a loss of 55 cents.
The company said its net loss narrowed to $93 million, or 29 cents per share, in the quarter ended Nov. 2, from $151 million, or 48 cents per share, a year earlier.
J.C. Penney's total revenue fell 8.5% to $2.5 billion in the third quarter.
The company also said it now expects its adjusted earnings before interest, tax, depreciation and amortization for the year to exceed $475 million, compared with its prior outlook of $440 million to $475 million.
It maintained its full-year forecast for comparable store sales.
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Sales at stores open for more than a year fell 9.3% compared with expectations of a 7.74% slide, according to data from IBES Refinitiv.
Written By: Reuters
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