J.C. Penney Co.'s first-quarter loss narrowed in about half as
the retailer reported lower costs and an uptick in sales.
Sales at established stores rose 3.4%, below its revised
projections of 3.5% to 4.5%, but within its earlier view of 3% to
5% growth.
Pointing to the improved performance, the Plano, Texas-based
retailer, which has been trying to rebound from a calamitous
overhaul, raised its projections for the year, saying it now
expects sales at established stores to increase 4% to 5%, compared
with its earlier view of 3% to 5%, and gross margin to improve 100
to 150 basis points, up from 50 to 100 basis points, previously.
Free cash flow is expected to break even for the year.
Shares, down nearly 4% over the past 12 months, rose nearly 2%
to $8.85 in late trading Wednesday.
In 2011, the department-store chain, under pressure from
activist investors, turned to Ron Johnson, who had helped create
the mystique around Apple Inc.'s retail operation, to succeed its
retiring chief executive. The hiring was initially a boon to the
company's stock, but Mr. Johnson's turnaround plans misfired.
Sales, down about 3% in 2011 from the year earlier, fell nearly 25%
in 2012 and nearly 9% in 2013.
J.C. Penney ousted Mr. Johnson in April 2013 and brought back
his predecessor, Myron "Mike" Ullman.
In 2014, the retailer posted a 3% sales increase and said it
hired Marvin Ellison, who helped turnaround Home Depot Inc. Mr.
Ellison is slated to succeed Mr. Ullman in August.
In 2014, J.C. Penney reported $87 million in restructuring and
management transition charges, down from $215 million in 2013 and
$298 million in 2012, according to regulatory filings.
In the latest period, the company reported $22 million in
restructuring-related charges, unchanged from the year-ago
period.
Overall, for the period ended May 2, J.C. Penney reported a loss
of $167 million, or 55 cents a share, compared with a loss of $352
million, or $1.15 a share, a year earlier.
Excluding restructuring-related charges and other items, the
loss was 57 cents a share, compared with a loss of $1.16 a share a
year earlier.
Sales rose 2% to $2.86 billion.
Analysts surveyed by Thomson Reuters projected a loss of 76
cents a share on $2.87 billion in sales.
Gross margin improved to 36.4% from 33.1% a year earlier.
In the latest period, women and men's apparel along with home
were the top-performing categories, the company said, while
cosmetics chain Sephora locations at its stores continued to do
well and all geographic regions posted higher sales.
Inventory fell 0.85% to $2.81 billion.
Write to Maria Armental at maria.armental@wsj.com
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