Categories: Media Moves

Coverage: Penney’s performance disappoints ahead of holidays

Dallas-based department store chain J.C. Penney reported earnings that were less than expected and underperformed compared to competitors, calling into question how well it will perform during the holiday shopping season.

Anne D’Innocenzio of the Associated Press had the news:

Penney is trying to recover from a catastrophic reinvention plan under former CEO Ron Johnson that sent sales and profits into a free-fall in 2012 and 2013. Business stabilized under Mike Ullman, who took the helm in 2013 after Johnson was pushed out. Under Marvin Ellison, who has been CEO since 2015, Penney is looking for new ways to increase sales while playing catch up in e-commerce.

Like other department stores, J.C. Penney is trying to adjust to changing shopping patterns. Consumers are shifting their spending away from clothing and toward experiences like beauty treatments or toward furnishing their home. And when they do pick up clothing, it’s more often at off-price stores or online as Amazon moves more into apparel.

Given the environment, Penney wants to be less dependent on clothing, and is focusing its efforts on its home area and rolling out major appliances in it stores. It now has major appliances in 500 of its stores. It has expanded the Sephora beauty shops and is updating its beauty salons, now branded Salon by InStyle. It is also beefing up its store label brands like St. John’s Bay.

Nathan Bomey of USA Today reported that Macy’s and Kohl’s performed better:

In a week in which Macy’s and Kohl’s outperformed expectations, Penney fell short — and investors punished the company’s stock, which was down 6.2% to $8.26 in pre-market trading. Shares rebounded later and were down under 1% by late afternoon.

Net sales fell 1.4% to $2.86 billion in the quarter ended Oct. 29, missing S&P Global Market Intelligence expectations of $2.95 billion. The company’s net loss improved from $115 million a year ago to $67 million, matching expectations.

On a per-share basis, the company lost 22 cents, improved from a 38-cent loss a year earlier.

Penney reported improvements in its Sephora, jewelry, salon and appliances. But CEO Marvin Ellison, in a statement, acknowledged “softness in apparel sales.”

The company maintained its projection of $1 billion in earnings before interest, taxes, depreciation and amortization for 2017 and predicted $1.2 billion for 2017.

Korri Kezar of the Dallas Morning News noted that Penney is focused on the holiday season:

As the company heads into the Christmas shopping season, it is preparing to open store doors for Black Friday sales at 3 p.m. on Thanksgiving Day. The sales will begin a day earlier on the retailer’s website.

The company has also improved its omnichannel shopping capabilities and will offer 40 percent more products online than last year. For customers who buy online for pick up in store, orders can be filled by any store sales associate thanks to the introduction of J.C. Penney’s mobile warrior. The technology allows associates to check inventory and orders from the sales floor.

“This new functionality, along with our mobile app, our improved store fullfilment and our enhanced delivery capabilities will increase revenue in the fourth quarter,” Ellison said.

J.C. Penney is also introducing toys to its assortment this holiday season after listening to feedback from mothers in its customer base.

Chris Roush

Chris Roush was the dean of the School of Communications at Quinnipiac University in Hamden, Connecticut. He was previously Walter E. Hussman Sr. Distinguished Professor in business journalism at UNC-Chapel Hill. He is a former business journalist for Bloomberg News, Businessweek, The Atlanta Journal-Constitution, The Tampa Tribune and the Sarasota Herald-Tribune. He is the author of the leading business reporting textbook "Show me the Money: Writing Business and Economics Stories for Mass Communication" and "Thinking Things Over," a biography of former Wall Street Journal editor Vermont Royster.

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