J.C. Penney Soars as CEO Says Turnaround Plan Gaining Steam
(Bloomberg) -- J.C. Penney Co. shares surged after the company raised its profit forecast, even amid another quarterly sales decline, as the battered department-store chain’s turnaround plan gains more time to play out.
- Excluding some items, earnings before interest, taxes, depreciation and amortization will exceed $475 million this year, up from a previous forecast of between $440 million and $475 million. The chain also posted a drop in inventory in the third quarter, a sign its struggles with buildups of unpopular merchandise is easing. For more on the results, click here.
- J.C. Penney’s report shows it’s making progress in improving its operations, and that cheered investors. “We are beginning to see results -- both in our numbers and how we operate as a business,” Chief Executive Officer Jill Soltau said in a statement.
- Still, same-store sales, a key retail metric, fell 9.3% last quarter. That’s worse than the average projection for a decline of 8.3%, according to Consensus Metrix. With foot traffic falling and five straight drops in comparable sales, the chain is testing new store formats and in-store experiences. New Commerce Department figures show U.S. retail sales rebounded in October, though categories including clothing and furniture posted declines.
- This holiday season is especially critical for the retailer, and Soltau said on a conference call that “it really is the first step of us connecting differently with our customers.” Among new features is its partnership with the Hallmark channel, which runs holiday-related programming, and Santa photo ops at its in-store portrait studios.
- Soltau also said the company has no plans to alter the number of stores in its fleet. With a number of retailers across the industry paring back locations, investors are paying close attention to decisions regarding store counts.
- The retailer reported liquidity of about $1.7 billion for the quarter, and reaffirmed its expectation for $1.5 billion of liquidity at the end of the year.
- The shares jumped as much as 12% in New York Friday, the biggest intraday gain in more than a month. The stock had gained 5.8% this year through Thursday’s close.
- For the company statement, click here.
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