Dismal sales performance
JCPenney’s (JCP) net sales declined 4.3% to $2.6 billion in the fiscal first quarter, which ended on May 5. The company’s same-store sales grew 0.2% in the fiscal first quarter. JCPenney pointed to the unfavorable weather in April as a reason for its weak sales in the quarter.
Rival department store chain Macy’s (M) positively surprised investors by reporting sales growth of 3.6% to $5.5 billion in the fiscal first quarter. Kohl’s (KSS) sales also rose 3.6% to ~$4.0 billion.
JCPenney (JCP) is following a three-part strategic framework that focuses on strengthening its private brands, establishing its presence as an omnichannel retailer, and increasing its revenue per customer.
In terms of merchandise categories, beauty has been one of the key growth areas for JCPenney, especially its Sephora in-stores. The company’s beauty business also includes Salon by InStyle and fine jewelry. In fiscal 2017, JCPenney opened 70 Sephora locations and ended the year with 642 locations.
In fiscal 2018, JCPenney plans to add about 30 new Sephora locations and launch several new brands. The company plans to modernize and rebrand 100 salons to The Salon by InStyle brand in fiscal 2018.
JCPenney (JCP) expects its home business to improve its revenue per customer, and the company has appliance showrooms in more than 600 stores. It also expanded its mattress offerings to about 500 in-store showrooms.
To improve its apparel business, JCPenney is enhancing its merchandise in special sizes, activewear, dresses, and sportswear.
JCPenney also invests in its omnichannel capabilities. The company noted that all of its physical store network is being utilized for fulfilling online orders. About 80.0% of the company’s existing inventory is available for free same-day pickup.
In the next part of this series, we’ll look at analysts’ expectations for JCPenney’s sales and earnings.