JCPenney's first quarter surprise, a 6% sales increase

JCPenney (NYSE: JCP) reported better-than-expected earnings Thursday, marking the second consecutive quarter of growth for the struggling retailer which, in February, posted its first quarterly profit in more than two years.

Sales at the department store retailer totaled $2.8 billion for the quarter ended May 3, growing 6.3 percent over $2.64 billion for the same period last year. Same-store sales increased 6.2 percent and improved sequentially each month within the quarter, much better than the 16.6 percent same-store sales loss reported last year in 2013 for the same time period.

Even with the sales improvements, JCPenney's net income showed a $352 million loss, much less, however, than analysts had predicted for the quarter.

Online sales were a major highlight for JCPenney during the quarter and saw a 25.7 percent increase. Other bright spots include the relaunch of JCPenney's home department, one of the best performing of the quarter along with jewelry and apparel. The retailer also opened 30 new Sephora stores within its department stores, a partnership that has attracted more traffic and helped boost sales for JCPenney. In April, with the help of Easter promotions, JCPenney said customer traffic was positive for the first time in 30 months.

"We are very pleased to report that JCPenney delivered its second consecutive quarter of comparable store sales growth, as well as continued gross margin improvement. It is clear that our efforts to re-merchandise many areas of the store and revamp our messaging to the customer are taking hold," said CEO Myron Ullman in a call with analysts.

Ullman has presided over JCPenney's turnaround, taking over after Ron Johnson stepped down following an unsuccessful revival attempt that saw the chain get rid of coupons and eliminate private-label brands. Under Johnson, who also altered the layout of JCPenney's stores, same-store sales plunged more than 20 percent for a year, and revenue dropped as much as 25 percent.

Ullman was brought back when it was clear that JCPenney's prospects had turned so bleak that some financial analysts believed it was headed for bankruptcy. Looking ahead, Ullman stated the company intends to carry the growth trend into the second quarter by re-merchandizing areas of the store and with advertising.

For more:
-See this JCPenney earnings call transcript

Related news:
JCPenney adds intimates from Elle Macpherson
JCPenney CEO Mike Ullman gets $1.5 million raise
JCPenney is on the path to recovery, posts first quarterly profit since 2011
JCPenney to close 33 stores, slash 2,000 jobs
JCPenney comp-store sales rise 10% in November

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