2Q17 sales beat estimates
JCPenney (JCP) delivered sales of ~$3.0 billion in fiscal 2Q17, which ended on July 29, 2017. The company exceeded consensus analysts’ expectation of $2.8 billion in fiscal 2Q17. JCPenney missed analysts’ sales expectations for fiscal 1Q17.
Sales growth drivers
JCPenney’s sales grew 1.5% on a year-over-year basis in fiscal 2Q17—an improvement compared to a 3.7% fall in sales in fiscal 1Q17 and in line with 1.5% sales growth in fiscal 2Q16. Merchandise categories that performed well in the quarter included home, fine jewelry, footwear and handbags, Sephora, and the salon business.
JCPenney’s apparel business improved in the second quarter, particularly in kids apparel. The company made changes to its kids’ apparel assortment, mainly in the special size categories of Girls Plus and Boys Husky. JCPenney is taking several initiatives to revamp its women’s apparel business. The company is focusing on casual and contemporary women’s clothing like activewear.
In contrast to the growth in its overall sales, JCPenney’s same-store sales fell 1.3% in the second quarter. In the fiscal 2Q17 conference call, JCPenney’s CEO Marvin R. Ellison indicated that inventory liquidation at the company’s closing stores had a short-term cannibalization impact on its same-store sales in the second quarter. As we mentioned earlier in this series, JCPenney closed and liquidated inventory in 127 of the 138 stores that it plans to close in fiscal 2017.
JCPenney’s fiscal 2Q17 sales growth was better than its department store peers Macy’s (M) and Kohl’s (KSS). Macy’s reported lower sales for the tenth consecutive quarter with a 5.4% fall in its fiscal 2Q17 sales. Kohl’s sales fell 0.9% in fiscal 2Q17—its sixth straight quarter with lower sales.
JCPenney expects its same-store sales to fall -1.0% to 1.0% in fiscal 2017.
In the next part, we’ll discuss JCPenney’s margins.