J.C. Penney Slims 3Q Loss, But Sales Fall 26.6 Percent
PLANO, Texas-With net sales taking a 26.6 percent slide, J.C. Penney posted a net loss of $123 million in the third quarter, down from the $143 million in red ink the retailer reported in its third quarter of last year.
Net sales finished the quarter, which ended on Oct. 27, at $2.9 billion, including a same-store sales drop of 26.1 percent. CEO Ron Johnson, who characterized J.C. Penney's performance as "a tale of two companies," said, "By far, the largest part of our store is the old J.C. Penney, which continues to struggle and experience significant challenges, as evidenced by our third-quarter results. However, the new jcp, centered around the shop concept, is gaining traction with customers every day, and is surpassing our own expectations in terms of sales productivity, which continues to give us confidence in our long-term business model."
The third quarter saw J.C. Penney open shops for Levi's, Izod, Liz Claiborne, The Original Arizona Jean Co. and its own jcp brand. It also opened 38 Sephora-inside-jcpenney stores. As of now, the retailer has transformed about 7.2 million square feet into the shop concept.
Due to the sales drop and an increased level of clearance sales, gross margin fell 484 basis points to 32.5 percent. Selling, general and administrative expenses were down 12.5 percent in dollars but rose 598 basis points as a percentage of sales, to 37.1 percent.