Lower second-quarter sales
JCPenney’s (JCP) net sales fell 7.5% on a YoY (year-over-year) basis to $2.76 billion in the fiscal second quarter, which ended on August 4. The company’s fiscal second-quarter revenue (made up of retail net sales and credit income) fell 7.8% to $2.83 billion and missed analysts’ estimate of $2.86 billion.
JCPenney’s 7.8% revenue fall in the quarter was steeper than its 4.1% fall in the fiscal first quarter.
What impacted JCP’s fiscal second-quarter sales?
JCPenney’s lower net sales in the fiscal second quarter reflected the impact of the closure of 141 of its stores in fiscal 2017. JCPenney had closed many unprofitable stores in the previous fiscal year to streamline its operations. Softer sales in June also impacted JCPenney’s fiscal second-quarter top line growth.
JCPenney’s same-store sales rose 0.3% in the fiscal second quarter. The same-store sales growth of the company’s women’s apparel business was higher than its overall same-store sales growth. JCPenney has been making efforts to improve its women’s apparel business, including enhancing its merchandise assortment, focusing on activewear, and offering plus-size clothing.
Aside from women’s apparel, merchandise categories that performed well in the quarter included the kid’s, jewelry, Sephora, and salon categories. The home, women’s accessories, shoes, and handbags categories failed to impress in the quarter.
Updated sales outlook
JCPenney now expects its same-store sales to be flat in fiscal 2018. The company had previously expected its same-store sales to grow in the 0.0%–2.0% range. Growing competition from online retailers such as Amazon (AMZN) and discount retailers such as TJX Companies (TJX) is hitting department stores hard.
However, some company-specific issues also seem to be causing JCPenney to underperform its peers. In the fiscal second quarter, Macy’s (M) reported a 1.1% fall in its net sales, while Nordstrom (JWN) delivered impressive sales growth of 7.1%.
We’ll discuss JCPenney’s margins in the next article.