The uptick in JC Penney’s holiday sales performance should help ease fears the US retail giant is in a “terminal decline”, according to one analyst, as the company reaffirmed all components of its full-year guidance on the back of encouraging holiday sales.
In its holiday sales performance update yesterday (4 January), JC Penney said comparable store sales for the combined nine-week period ending 30 December increased 3.4% over the same period last year.
“We are very encouraged with our overall comp sales performance during the holiday season, which was led by home, beauty and fine jewellery,” said CEO Marvin Ellison. “Additionally, our apparel categories continue to demonstrate improved comp performance, particularly in women’s and kids. We are also pleased by our e-commerce business that continues to outpace prior year results with double-digit sales growth, largely driven by sought-after gifting categories such as fine jewellery, home decor and luggage, toys, boots and athletic footwear. Our ability to execute e-commerce fulfillment from 100% of our brick and mortar stores helped fuel the growth in e-commerce for the holiday season. We remain confident that our strategic initiatives are taking hold and resonating with customers.”
Ellison added that as the company closes out fiscal 2017, it remains committed to operating the business for growth, while providing customers more reasons to shop and experience “everything JC Penney has to offer”.
The uptick comes on the back of an organisational restructuring, announced in November of last year, that saw the departure of chief merchant John Tighe and is designed to streamline decision-making and promote greater agility within its merchandise buying teams.
JC Penney restructures, CMO role eliminated
Anthony Riva, analyst at GlobalData Retail, notes after an extended period of weaker performance and downgraded expectations, JC Penney’s holiday results come as something of a relief and should help to ease fears that JCP is in terminal decline.
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By GlobalData“While the uplift came off the back of a soft 0.8% drop in sales last year, the fact that there has been growth across the categories JCP has been improving is a justification of the strategies Marvin Ellison and his team have been pursuing,” he says.
“From our early analysis, it appears that apparel sales have improved – particularly in kids. However, we still see this as an area where JCP is underweight and is suffering from weak conversion. Overall, we believe JCP continues to cede market share in apparel and needs to take more decisive action of it is to course-correct in 2018.”
Meanwhile, Riva adds inventory levels and discounting appeared to be “well managed” over the holiday period – something GlobalData believes will help protect margins for the quarter.
“All in all, these results provide JCP with some much-needed breathing space,” he adds. “They show that the retailer can succeed if it is able to draw people into stores and online. However, as customer traffic drops back to normal levels, the chances of sustaining this performance do not look favourable.
“This underlines the fact that JCP has a lot more work to do in re-energising its proposition across 2018 to give people reasons to visit.”
