Why JCPenney’s Sales Were Unimpressive in Fiscal 1Q17
JCP’s dismal 1Q17 sales
JCPenney (JCP) disappointed investors yet again in 1Q17 by delivering lower-than-expected sales for the quarter. The company generated sales of $2.71 billion in fiscal 1Q17, which ended on April 29, 2017, but it missed the consensus Wall Street analysts’ sales estimate of $2.77 billion.
The company’s sales fell 3.7% on a YoY (year-over-year) basis in fiscal 1Q17, making it the third consecutive quarter of sales declines for the mid-tier department store.
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Weakness in 1Q17
JCPenney’s lower sales in fiscal 1Q17 reflected the weakness in department store sector. Peers Macy’s (M) and Kohl’s (KSS) reported declines of 7.5% and 3.2%, respectively, in their fiscal 1Q17 sales.
The decline in JCPenney’s sales in fiscal 1Q17 was primarily due to a challenging month in February. The company experienced improved same-store sales in March and April, but overall, the company’s fiscal 1Q17 same-store sales fell 3.5% on a YoY (year-over-year) basis.
In terms of divisions, Home, Sephora, Fine Jewelry, and Salon performed well. In its 1Q17 conference call, JCPenney Chairman and CEO (chief executive officer) Marvin R. Ellison stated that the company’s apparel business struggled during the quarter. However, certain items like active apparel and dress business in the women’s apparel category looked promising.
Despite the dismal performance in fiscal 1Q17, the company reiterated its fiscal 2017 guidance. The company expects its fiscal 2017 same-store sales to be in the -1% to 1% range and adjusted EPS to be in the $0.40 to $0.65 range.
We’ll discuss JCP’s margins in the next part.