J.C. Penny delivered encouraging news this week as it posted a strong rise in its sales at comparable stores. That reversed four consecutive quarters of declines. The department store chain posted a loss that was smaller than expected for its third quarter, which helped to send its shares surging upward.
The positive news helped stop, at least for the time being, a selloff in shares of the company that had accelerated in October when the chain, based in Plano, Texas, warned it would have to liquidate merchandise that did not sell well.
Shares, which have fallen 67% in 2017, had reached a new all-time low.
Initiatives made to increase the quality of its clothing lines to push sales have given confidence to us that the overall transformation and strategy is taking hold, said Marvin Ellison the CEO at J.C. Penney, in a prepared released on Friday.
Ellison noted that through selling off its unwanted merchandise, the retailer will enter the all-important holiday shopping season with less backlog so fresh items will be out on the floor on display.
The performance by Penney was the bright spot in what has been a mixed bag of financial results from the country’s department stores, with many released reports during the week. However, challenges still lie ahead as the critical holiday shopping season creeps closer.
On Thursday, Macy’s posted sales that fell at its established locations for the quarter, marking the 12th consecutive quarter of declines.
Kohl’s posted a drop in its profit for the quarter on Thursday, although it said sales were up for the quarter. Nordstrom, which posted result following the bell Thursday, saw one of its important sales measures drop and cut its outlook.
As with many of today’s retailers, department stores are wrestling with weaker sales as clients shift to shopping online.
However, J.C. Penney had other challenges as well after its failed attempt of reinventing itself under Ron Johnson a former executive with Apple. Since his departure, the business has brought back its major appliances such as dishwashers and expanded its Sephora beauty shops that are in-store to be in over 75% of its overall locations.
During the soon to start holiday season, J.C. Penney is making toy shops inside its stores and opening one hour earlier on Thanksgiving, which will be earlier than rivals such as Macy’s and Kohl’s.
J.C. Penney’s loss was $128 million equal to 41 cents per share, compared to a $67 million loss equal to 22 cents a share one year ago.