By Dow Jones Business News, October 08, 2013, 08:35:00 AM EDT
J.C. Penney Sees Sales Improving
J.C. Penney Co. ( JCP ) on Tuesday reported improving sales trends in September but noted that turning around the
struggling retailer is still in the early stages.
At stores opened more than a year, sales fell 4% last month, an improvement over the roughly double-digit declines in
August and the second quarter.
"Over the last six months, we have made significant strides and are now seeing positive signs in many important areas
of the business, in spite of what continues to be a difficult environment for consumers and retailers in general," Chief
Executive Myron E. "Mike" Ullman said.
He acknowledged, though, that the company is "still in the early stages of the turnaround," and Penney suggested
challenges remain, such as improving traffic at mall-based stores, weaker profitability because of discounting and
fixing its home department.
Nonetheless, investors were encouraged by the improvement in sales. Shares, which have fallen 61% in 2013 and are
trading at multidecade lows, jumped 6.2% premarket to $8.19.
Penney is struggling to overcome a year and a half under former Chief Executive Ron Johnson. Mr. Johnson cut back
discounts and did away with some popular house brands without first testing the moves, which drove away shoppers and
plunged the company into the red.
Tuesday, Penney said it's "making solid progress" in its turnaround efforts, with its core customer reconnecting with
the department store, especially during promotional events.
"Reconnecting with our customers and getting them into our stores is a top priority," Mr. Ullman said. Still, the
company said customer traffic at its mall-based stores "continues to be difficult."
Mr. Ullman, who returned to the helm of Penney in the spring, has brought back discounts and is stocking more of the
house brands that the retailer was known for, including women's apparel labels Worthington and St. John's Bay. He's also
trying to rework the chain's home departments after a costly revamp planned by Mr. Johnson failed to catch on with
The retailer acknowledged that "getting the new "home" strategy up and running has been more challenging than
originally planned." While the company has re-opened all but a handful of its 505 new home departments, "the merchandise
assortment, shopping environment and price points have not resonated with customers, and sales trends remain weaker in
stores," Penney said.
In addition, the retailer said overall profits continued to be squeezed because of more sales of discounted materials
as well as the company's transition back to a promotional pricing strategy.
On the positive side, Penney said sales at JCP.com continue to trend double digits ahead of last year and are up 19%
in the third quarter to date. September sales on JCP.com rose 25% from a year ago.
Write to Ben Fox Rubin at email@example.com
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