J.C. Penney Reports Another Quarterly Loss Amid Signs Of Life

(RTTNews) - Struggling department store chain J.C. Penney Co., Inc. (JCP) reported Wednesday a significantly larger loss for the third quarter compared to a year ago.

Earnings came in below analysts' expectations, but the company offered a glimmer of hope for investors betting on a turnaround. Penney now projects sequential and year-over-year improvement in comparable store sales and gross margin in the fourth quarter.

The company noted that sales continues to improve as it makes strides towards a path to profitable growth. It achieved positive 0.9 percent comparable store sales gain in October, with sales improving sequentially each month within the quarter.

"Our strategies to reconnect with customers are beginning to take hold, and this became increasingly clear as the quarter progressed. This is the result of the tremendous efforts of the associates across our Company to restore the merchandise customers want and deliver an unmatched shopping experience," CEO Myron (Mike) Ullman, III said in a statement.

Shares are up 4 percent in pre-market trading this morning.

Plano, Texas-based Penney reported a net loss of $489 million or $1.94 per share for the third quarter, sharply wider than $123 million or $0.56 per share in the prior-year quarter.

Excluding restructuring and management transition charges, adjusted net income for the quarter was $457 million or $1.81 per share, compared to adjusted net loss of $203 million or $0.93 per share a year ago.

On average, 19 analysts polled by Thomson Reuters expected the company to report a loss of $1.72 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter decreased 5.1 percent to $2.77 billion from $2.93 billion in the same quarter last year, and missed twenty-one Wall Street analysts' consensus estimate of $2.80 billion. Internet sales through jcp.com increased a strong 24.5 percent.

Comparable store sales for the third quarter declined 4.8 percent, compared to a sharp 26.1 percent drop in the year-ago quarter. The company noted that women's apparel, men's apparel and fine jewelry were its top performing merchandise divisions.

"We are proud of the Company's October sales performance, encouraged by the early weeks of November, and believe we are making strides toward a path to long-term profitable growth," Ullman added.

Gross margin for the quarter contracted 300 basis points to 29.5 percent and total operating expenses as a percentage of total sales expanded 610 basis points to 43.9 percent from last year.

The company also noted that it repaid $200 million from revolving credit facility and opened 30 new Sephora inside JCPenney locations, bringing the total to 446.

Looking ahead to the fourth quarter, the company said it expects comparable store sales and gross margin to improve sequentially and year-over-year.

Ullman continued, "The spirit and determination of our associates has enabled us to maintain our momentum going into the fourth quarter. We are committed to building on our progress by winning this holiday season."

JCP closed Tuesday's regular trading session at $8.71, down $0.06 on a volume of 28.79 million shares. For the past year, the stock traded in a range of $6.24 to $23.10.