JCPenney’s 4Q15 Sales Should Benefit from Strong Holiday Results



Strong holiday sales

JCPenney (JCP) reported same-store sales growth of 3.9% in November and December—the 2015 holiday season. Macy’s (M), the largest department store in terms of sales, reported a 4.7% decline in its same-store sales on an owned-plus-licensed basis in the 2015 holiday period, citing unfavorable warm weather.

Despite this unfavorable weather, JCPenney reported strong same-store sales growth. Its focus on private brands, omnichannel capabilities, and attractive merchandise helped its results. The crucial holiday season comes in the fourth quarter of department stores’ fiscal year.

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Consistent improvement

JCPenney has reported strong same-store sales growth in each of the first three quarters of fiscal 2015. In 3Q15—which ended October 31 2015—the company reported same-store sales growth of 6.4%. This growth was driven by positive comparables across all merchandising divisions—especially men’s apparel, home, Sephora, footwear, and handbags. Overall, JCPenney’s net sales grew 4.8% in 3Q15. JCPenney constitutes 0.04% of the iShares Russell Mid-Cap ETF (IWR).

JCPenney’s same-store sales growth in 3Q15 surpassed its department store peers. Nordstrom (JWN) and Kohl’s (KSS) reported same-store sales growth of 0.9% and 1%, respectively. Macy’s and Dillard’s (DDS) reported a decline of 3.9% and 4% in their same-store sales, respectively, in 3Q15.

Analysts’ expectations

In the 3Q15 conference call, JCPenney’s chief executive officer, Marvin R. Ellison, stated that the company expects its 4Q15 same-store sales to be in line with full-year fiscal 2015 expectations. For fiscal 2015, the company expects same-store sales growth in the 4%–5% range.

JCPenney is scheduled to report its 4Q15 results on February 26. As of January 25, the consensus Wall Street sales estimate for 4Q15 sales is $4 billion. This estimate reflects 2.6% growth in 4Q15 sales on a year-over-year basis.

One of the company’s key sales growth drivers is its online sales. We’ll discuss them in the next part of this series.


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