J.C. Penney scored a major victory during October with same stores sales up 0.9%. That may not seem like much, but for a company that has been written off by many the meager increase offers an encouraging tailwind heading into what retailer’s nationwide expect to be a challenging holiday season.
According to the company, it continues to make meaningful progress in its turnaround. The 0.9% October comp is evidence of that as was a 37.6% comp increase at JCP.com and favorable customer response to promotional events and improved inventory levels compared to last year. While average unit retail and overall traffic fell below last year's levels, the average transaction value and units per transaction in October were up from last year, according to the company.
"J.C. Penney has made significant progress in addressing the challenges it faces, and we believe the company is on the right track to return to long-term profitable growth," said CEO Myron E. (Mike) Ullman, III. "We are proud of our October sales improvement, which we achieved despite the federal government shutdown and a challenging consumer environment. Not only did we deliver positive same store sales for the first time since December of 2011, we also saw significantly improved sales trends in home and men's apparel, as well as women's accessories."
The company attributed its improved sales trends to the restoration of inventory levels in key private brands, including St. John's Bay, Stafford, and jcp Home. The company also said it saw significant sales increases in brands such as Levi's, Nike, Carter's, Dockers, Alfred Dunner, Vanity Fair and IZOD.
The best performing division in October was the home department, according to the company, thanks to a remerchandising effort. The company said it reconfigured the department to better reflect how customers shop while highlighting its most compelling brands and price points.
Other areas of progress highlight in a press release distributed in advance of the company’s release of third quarter results on November 20 included the growth of online and expansion of Sephora departments. Comps at jcp.com increased 37.6% with online sales of home good up more than 50% and accounting for half of total online sales.
Regarding Sephora, 30 new Sephora departments were added to J.C. Penney stores bringing the number of department to 446 locations.
While improving sales trends are a positive sign for the company, profits will be negatively affected by clearance activity related to the overhang of bloated inventories from the first two quarters.
"As the turnaround is progressing, we are focused on restoring a compelling mix of private, exclusive and national brand merchandise that better resonates with our customer and results in fewer markdowns at the end of the selling season,” Ullman said. “As we look ahead, we are fully prepared to execute our aggressive plans for the holidays, including opening at 8 p.m. on Thanksgiving Day. We will soon be unveiling new marketing to better communicate the unique value and stylish merchandise assortment we offer. We expect the holiday season to be extremely competitive, and we are ready to win."