Dismal results so far
After reporting weak same-store sales growth in the first two quarters of fiscal 2018, JCPenney (JCP) further disappointed investors by reporting a 5.4% drop in its same-store sales in the third quarter of fiscal 2018, which ended on November 3. Same-store sales growth is a key metric for retailers that reflects the change in sales of existing stores, ignoring the impact of stores opened or closed during a particular period.
JCPenney’s overall revenue (comprising retail net sales and credit income) fell 5.3% in the third quarter. Lower-than-expected sales in September and October caused a 5.8% decline in the company’s retail net sales to $2.65 billion.
JCPenney’s same-store sales have fallen 1.7% in the first nine months of fiscal 2018, and the company expects its full-year fiscal 2018 same-store sales to fall by low single digits.
JCPenney has been implementing several measures to improve its store sales as well as its online business. The company has been enhancing its beauty business, which it believes will drive more customer traffic and increase the frequency of customer visits. The company’s beauty business includes its Sephora stores, salons, and fine jewelry.
The company’s Sephora locations within JCPenney stores have been a key growth driver. As of the end of fiscal 2017, JCPenney operated 642 Sephora locations within its stores and opened another 27 stores in fiscal 2018. The company continues to introduce new brands in its Sephora in-stores. JCPenney is trying to attract more customers by rebranding its salons to The Salon by InStyle brand.
JCPenney is also focusing on improving its women’s apparel business by offering enhanced merchandise in categories such as activewear, special sizes, dresses, and casual sportswear. To boost the sales of its home business, JCPenney has rolled out appliance showrooms in more than 600 stores and is offering mattress in about 500 showrooms within its locations.
To boost its online sales, the company is enhancing its site functionality, strengthening ship-from-store capabilities, and providing enhanced features on its mobile app.
Analysts expect JCPenney’s revenue to decline 5.8% to $3.8 billion in the fourth quarter of the fiscal year. Analysts currently expect the company’s revenue to fall 3.8% to $12.0 billion in fiscal 2018 and fall 0.8% to $11.9 billion in fiscal 2019.