JCPenney (NYSE:JCP) reported better-than-expected earnings for the second quarter of its fiscal year. The department store chain reported a 5 cent per-share loss on an adjusted basis. This translated to a loss of about $56 million in the last quarter. Analysts expected a 15 cent loss. The company reported a 41 cent loss in the same quarter a year earlier.
Revenue grew 1.4 percent to $2.92 billion, slightly lower than analysts’ expectations of revenue of $2.93 billion. The results were an improvement over the chain’s last decade. However, Penney’s annual revenue remains well short of the $19.9 billion it reached less than a decade ago. Last year, it brought in revenue of $12.6 billion.
Comparable-store sales increased 2.2 percent year-over-year. Analysts polled by Thomson Reuters expected the company to post a 2.4 percent gain. The company reiterated its 2016 guidance for a comparable sales gain of 3 percent to 4 percent. Adjusted earnings for the full year are expected to be around $1 billion.
JCPenney is pushing ahead with a reorganization. The retailer is attempting to turn around its business after years of sales declines. The company said at the end of the first quarter that many of its initiatives would have a larger impact in the second quarter and beyond. The company added appliances back to its product mix in some stores earlier this year. Home goods are already one of the chain’s top divisions, so selling appliances makes sense.
The company has also added 60 more Sephora store-within-a-store cosmetics and beauty stops, which has helped results. The Sephora mini-stores have been the chain’s best-performing division. In many of the company’s conference calls over the past year, the continued rollout of Sephora has been cited as a key to driving traffic.
Several concerns still exist, including stiff competition, shifting consumer spending habits and high debt. Greater efforts to renovate and expand will put pressure on the company’s margins and increase it’s operating expenses. Department stores have been one of the most beaten down stocks lately. However, JCPenney’s has performed the best among its department-store rivals.
