J.C. Penney Company, Inc. released its latest quarterly results before opening bell, posting net sales of $2.66 billion. Net losses were $2.66 per share. Adjusted net loss was $2.16 per share. Comparable store sales fell 11.9 percent during the quarter, although they improved sequentially by 470 basis points when compared to the first quarter of the year. The company also noted that sales improved sequentially month over month during the quarter as well.
Analysts were expecting the retail chain to report a loss of between $1 and $1.06 per share on $2.8 billion in revenue. Shares of J.C. Penney Company, Inc. (NYSE:JCP) initially jumped 5 percent in premarket trading after the report was out before retreating slightly.
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J.C. Penney’s latest results broken down
The company attributed the year over year decline in comparable store sales to “failed prior merchandising and promotional strategies, which resulted in unusually high markdowns and clearance levels in the second quarter.”
The department store chain broke down its per-share losses to give investors a better picture of what’s happening. The adjusted net loss included losses of 99 cents per share associated with the company’s tax valuation allowance. It also included losses of 52 cents per share on retirement of debt from the tender offer and 21 cents per share in restructuring and management transition charges. There was also a 4-cent per share loss for primary pension plan expenses and a positive 28 cents per share benefit on the net gain from the sale of a non-operating asset.
Updates to gross margins and liquidity
J.C. Penney Company, Inc. (NYSE:JCP) reported that its gross margins during the second quarter were 29.6 percent of sales, compared to 33.2 percent in the same quarter a year ago. The retail chain said gross margins were negatively impacted by lower than expected sales and a higher level of clearance merchandise sales.
During the second quarter, the retail chain also enhanced its liquidity by securing a $2.25 billion senior secured term loan facility. It paid $355 million to complete a cash tender offer. J.C. Penney expects to end the year with $1.5 billion in overall liquidity.
J.C. Penney’s progress on the restructure
The company also revealed the progress it was making on its restructuring efforts. Interim Chief Executive Officer Myron Ullman said in a statement that they are moving quickly to stabilize the business and have made “meaningful progress in important areas.” J.C. Penney Company, Inc. (NYSE:JCP) also called the early weeks of the Back to School shopping season “encouraging.”
It highlighted three main areas of progress in its restructuring efforts. When Ullman returned to the company, he brought back promotions, and the company is now focusing on refining its marketing efforts. It is also working on restoring key merchandise levels ahead of the holiday shopping season and improving the performance of its website. J.C. Penney Company, Inc. (NYSE:JCP) said it “reclaimed its position among the most visited retail websites, based on aggregated traffic.
Other key areas highlighted by the retail chain in this morning’s report include fixing the Home store—one of the first areas to undergo changes under former CEO Ron Johnson. The company also invested more in associates and reaffirmed some of its key supplier relationships through a supplier summit.