J.C. Penney Q2 Loss Narrows, Results Beat View

(RTTNews) - Department store chain J.C. Penney Co. Inc. (JCP) on Friday reported a loss for the second quarter that narrowed from last year, driven by higher sales and improved margins.

Loss per share for the quarter was narrower than analysts' expectations and revenues beat their estimates.

J.C. Penney's improved results come as it strives to improve its growth trajectory. The company has been revamping stores, cutting costs and refurbishing its merchandise assortment to woo customers to its outlets, and has also focused on online sales.

Plano, Texas-based J.C. Penney's second-quarter net loss was $138 million or $0.45 per share, narrower than loss of $172 million or $0.56 per share in the same period last year. Excluding items, adjusted loss for the quarter was $0.41 per share, compared to loss of $0.75 per share in the prior-year period.

On average, 16 analysts polled by Thomson Reuters expected the company to report loss of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 2.7 percent to $2.88 billion from $2.80 billion in the year-ago period. Analysts were looking for sales of $2.86 billion for the quarter.

Same store sales for the quarter rose 4.1 percent, compared with an increase of 6 percent in the previous-year quarter.

For the quarter, men's, home, Sephora and fine jewelry were the top performing merchandise divisions, J.C. Penney said. In particular, Sephora continued its strong performance this quarter with a double digit increase in comparable store sales.

Gross margin expanded 100 basis points from last year to 37 percent of sales, driven by improvements in clearance and promotional selling margins.

SG&A expenses, as a percentage of sales, were down 310 basis points from last year. The savings were primarily driven by lower store controllable costs, advertising and improved private label credit card revenue.

Looking ahead to fiscal 2015, J.C. Penney reiterated its outlook for same-store sales to increase 4 to 5 percent and gross margin to improve 100 to 150 basis points.

The company now forecasts full-year earnings before interest, taxes, depreciation and amortization or EBITDA of about $620 million, up from the prior expectation of $600 million.

JCP is currently trading at $8.79, up $0.72 or 8.92 percent on a volume of 5.31 million shares.