JCPenney Reports Second Quarter Earnings

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On Friday, Aug. 11, JCPenney announced its second quarter 2017 earnings, posting a 1.5 percent increase in total net sales for the quarter. Highlights for the Company during the quarter included sequential comparative store sales improvement, significant acceleration in our kids’ apparel business and improved sales results across nearly all categories. Also, within the second quarter, we leveraged SG&A expenses, reduced inventory levels, improved free cash flow and strengthened our balance sheet through the successful completion of our tender offer for $300 million in outstanding debt.

Below is a breakdown of the Company’s performance:

During an investor call on Friday morning, Marvin R. Ellison, chairman and chief executive officer, said, “We are pleased we delivered sequential comp sales improvement of 220 basis points from Q1 to Q2, and total sales growth, including our closing stores, was a plus 1.5%. We managed inventory very effectively, delivering a reduction of 6.8% versus last year. We are also very encouraged that our new apparel initiatives led to sequential comp (sales) improving in all apparel categories in Q2.”

“Omnichannel was also a big win for us in the second quarter,” Ellison continued. “We rolled out free ship to store (with no threshold) and online fulfillment from all stores, which contributed to significant growth in the second quarter. All JCPenney stores now have the ability to fulfill online ship-from-store orders, and this significantly expands the fulfillment capacity of our Company while helping us reduce last-mile delivery cost.”

Chief Financial Officer Jeff Davis,who joined JCPenney on July 24, shared his enthusiasm for joining the Company by sharing, “The Company has done an outstanding job of improving its financial position over the last few years and returning the organization to profitability. I have full confidence that our strategic initiatives will continue to improve the financial strength and sustainability of the business and differentiate JCPenney as an omnichannel retailer.”

The Company also updated its cost of goods sold guidance and reaffirmed the remaining 2017 full year guidance as follows:

Please note, we now only disclose our cost of goods sold results and are no longer reporting gross margin on a separate line item. We made this change in Q2 to follow the SEC’s preferred presentation methods and disclosures. No changes were made to the actual calculation of gross margin. To arrive at our standard gross margin, simply take the inverse number of cost of goods sold.