J C Penney released the earnings results from its first quarter of fiscal 2015 after closing bell tonight, posting losses of 55 cents per share on $2.86 billion in sales. Analysts had been expecting losses of 80 cents per share and $2.87 billion in revenue. In the same quarter last year, the department store chain posted losses of $1.15 per share cents per share on $2.8 billion in revenue.
Key metrics from J C Penney’s earnings report
J C Penney Company (NYSE:JCP) reported a 3.4% increase in comparable store sales and a $168 million increase in first quarter EBITDA, which was $79 million, an improvement of 189% or 600 basis points. The department store chain reported a 330 basis point improvement in its gross margin, which rose to 36.4%, compared to last year’s 33.1% for the first quarter.
Welcome to our latest issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring Point72 Asset Management losing about 10% in January, Millennium Management on a hiring spree, and hedge fund industry's assets under management swell to nearly Read More
The company trimmed $44 million off its selling, general and administrative expenses during the quarter, bringing them down to $495 million or 33.8% of sales. That’s a year over year improvement of 220 basis points, which management said was mainly driven by lower controllable costs at stores, better credit income and advertising.
Operating income increased 70% to a loss of $75 million.
Management reported that Women’s Apparel, Men’s and Home were the three best-performing divisions in J.C. Penney stores. Also Sephora, which is now in 515 of the chain’s stores, continued to perform well. All geographic areas saw year over year sales growth, although the West and Central parts of the U.S. were the best-performing regions.
J C Penney ups guidance
The retailer also increased its full year guidance for 2015. Management now expects a 4% to 5% increase in comparable store sales, compared to their previous estimate of 3% to 5%. They now expect between a 100 and 150 basis point improvement in gross margins, which they previously expected to improve by between 50 and 100 basis points.
They’re predicting about $600 million in EBITDA and break even free cash flow. J C Penney Company Inc (NYSE:JCP) also expects selling, general and administrative expenses to decline $100 million, compared to the previous estimate of a decline of between $50 million and $100 million.