JCPenney turnaround driven by Sephora, e-commerce

The second quarter results show JCPenney's (NYSE:JCP) turnaround plan may finally be making some progress.

The retailer's better-than-expected progress was driven by a double-digit same-store sales increase of its in-store Sephora division, along with strong results from men's, home and fine jewelry, according to the company.

Total sales were up 2.7 percent to $2.88 billion, compared to $2.80 billion one year ago, and better than the analysts' forecast of $2.86 billion. Same-store sales rose even more, 4.1 percent.

The improvements come as the chain has been cutting costs and updating their assortment to improve performance. In addition, the store has heavily emphasized online sales and increased omnichannel capabilities.

To ensure faster delivery, JCPenney plans to introduce the buy online, pick up in-store (BOPIS) option at 250 locations this year. The company then plans to launch same-day delivery in the same 12 to 15 markets in 2016.

JCPenney also launched its app, which allows shoppers to conduct an image search based on the photos of an item or the barcode, Market Realist reported. After strong online sales in the first quarter, JCPenney continues to invest in improved search and navigation options to optimize online shopping.

In addition, the company increased the number of stores used to fulfill online orders by more than 160 stores. Not to mention, JCPenney's home department's new catalog was launched in March. The resurrected publication has already helped accelerate the growth of the online business.

Along with Macy's and Kohl's, the department store chain is no longer reporting online sales separately—focusing on an omnichannel approach. Thus far, the approach seems a positive one for JCPenny, as there is a 20 percent chance that customers who take advantage of BOPIS will purchase additional products when they go to pick up the items in-store.

At the end of the first quarter, new CEO Mike Ullman announced that the retailer was switching gears "from defense to offense" this year. In a quarterly conference call with shareholders, Ullman said that the department store will focus on taking back market share and restoring profitability to the business.

For more:
-See this JCPenney financial release
-See this Market Realist article
-See this Chain Store Age article

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