JCPenney continued to show declines last quarter though progress was cited on some of its recent turnaround initiatives involving marketing and stores.
The Plano, Texas-based department store, which targets working class families, reported a net loss of $30 million for the third quarter ended Oct. 28, versus a loss of $17 million in the year-ago period.
Penney’s posted an operating loss of $10 million versus operating income of $2 million in the year-ago period.
Net sales in the three-month period declined to $1.53 billion from $1.71 billion in the year-ago quarter. Credit income of $70 million put total revenues at $1.6 billion last quarter. In the 2022 quarter, credit income of $86 million put total revenues at $1.8 billion.
Overall inventory was down 12 percent over the same period last year.
Penney’s was bought out of bankruptcy by mall operators Simon Property Group and Brookfield Property Partners in November 2020 in a deal valued at $1.75 billion. The company has been slimmed down and significantly deleveraged.
Last August, the company revealed it would spend $1 billion by fiscal year 2025 to upgrade technology and associate tools, make physical improvements to help the stores look better; install a new point-of-sale system that better integrates with inventory, enhance WiFi, and improve merchandising tools and supply chain operations, and further the rollout of the JCP Beauty departments, among other changes. At the time Penney’s “Make it Count” branding campaign, emphasizing fashion, beauty and accessories offerings with value, accessible prices and inclusive sizing, was introduced.
The retailer’s financial results were contained in a consolidated financial statement released by a trust that was established by the developers to acquire 160 retail properties and six warehouse distribution centers from JCPenney and lift the business out of bankruptcy through the Chapter 11 reorganization.
The statement indicated that Penney’s “Make It Count” brand proposition launched in September got a favorable response. “As a result, customer frequency increased 300 basis points (last quarter) while digital sales as a percent of total sales improved 200 basis points over last year. In addition to making trips more frequently, customers’ average sales increased 11 percent in the quarter, a reflection of customers’ confidence in the value and quality of the merchandise the company offers.”
The filing also indicated that investments in store environment “yielded additional positive increases in net promoter scores and improved overall brand awareness. Over the quarter, the overall store traffic trend improved 160 basis points. While all these improvements reflect the positive impact of the company’s transformational investments and efforts, macroeconomic challenges continued during the quarter and led to a decline in sales.”
Margin improvements were seen in women’s apparel, adult active, and footwear and handbags, Penney’s indicated, without being specific. “Private brands continued to see selling margin improvements,” Penney’s indicated, signaling out St. John’s Bay and Liz Claiborne.
In addition, “National brand performance benefited from the reintroduction of brands like Adidas, Dickies and Wrangler. Strong performance in fragrances drove momentum increases for JCP Beauty, along with cross-shopping increases from beauty customers.
“Along with these important brand initiatives, ongoing discipline in promotional and markdown activities, supported by strategic investments in planning and allocation tools, resulted in bottom line benefits and further improved the inventory position for the company.”
For the nine months, year-to-date, Penney’s had a net loss of $11 million, versus a net profit of $176 million in the same period a year ago. Net sales reached $4.6 billion versus $5.16 billion a year ago. Credit income of $214 million brought total revenues up to $4.85 billion in the nine months. In the same period last year, credit income of $276 million brought total revenues up to $5.44 billion.
