J C Penney Company Inc (NYSE:JCP) has been trying to fundamentally get its business back on the map, and backing it away from bankruptcy and potential ruin. Years of experimental sales programs and business operations has had a devastating effect on the company as the initiatives have failed and almost brought down the retailer in the process. While J C Penney is not out of the woods quite yet, it did get some slightly encouraging news from its 3rd quarter earnings release.
J C Penney reported third quarter earnings of -$.77 earnings per share on revenue of $2.76 billion. Analysts were forecasting earnings of -$.80 earnings per share on revenue of $2.81 billion. J C Penney missed revenue estimates, but overall, the results showed that the struggling retailer lost less than last year during the same period and there are definitely more improvements that need to be done. J C Penney estimates that fourth quarter same store sales will come in between 2-4% and bring full year same store sales in a range between 3.5-4.5%.Gross margins increased by 7% during the quarter, as well, giving life to CEO Mike Ullman’s turnaround plan.
J C Penney’s turnaround
“This quarter shows the progress we are making in the final phase of J C Penney Company Inc (NYSE:JCP)’s turnaround,” says Ullman. Surprisingly, the retailer’s best performing departments have been home and fine jewelry, and that its stores in the west and northwest have provided the strongest results for the company. However, could the turnaround once again stall next year? Reports indicate that CEO Mike Ullman will be replaced next year by The Home Depot, Inc. (NYSE:HD)’s Marvin Ellison.
The revolving CEO door at J C Penney continues to be a problem, due to the fact that each chief executive has come in with these plans to turn the company around, failed at the attempt and room is made for someone else. These continued structural changes take an impact on workers and customers, as both attempt to cope and grasp the new changes.
J C Penney’s third quarter results
Overall, J C Penney Company Inc (NYSE:JCP)’s third quarter results were overall decent compared to a year ago. However, the company still continues to lose money and face very stiff competition from a wide range of big box retailers and online shopping powerhouses. Customers continue to be turned off by J C Penney’s antics and changing plans, which could continue to hurt the company if the new chief executive continues to fail in the turnaround bid. Additionally, J C Penney needs to find and solidify its leadership. The company needs to maintain a reliable and long term executive lineup that is committed to fixing the issues. The revolving door will not save J C Penney and there is still a long road to go before the company can claim success and revival. Until that time, the struggling retailer will continue to enact new, competitive approaches to the business and it is up to consumers to decide the fate of J C Penney.