JCPenney Remains a Question Mark

The third quarter at JCPenney wasn’t all bad news, but it wasn’t all that great either.

Penney Intermediate Holdings LLC, the parent company of the retail banner, said the third quarter ended Nov. 2 indicated improvements in traffic trends in the back-to-school selling period. “New customer acquisition and traffic trend gains created additional momentum in September” via “Really Big Deal” promotions on Thursday Night Football, the company said in a regulatory filing. Those promotions plus the leveraging of celebrity partnerships with Shaquille O’Neal, Gabrielle Union and Martha Stewart, among others, yielded a top-line sales impact that exceeded the retailer’s expectations, it said. Expectations include over two million new customers, plus increases in brand awareness as measured by social media impressions and engagement. The retailer also said its rewards program signups rose by nearly 25 percent year-over-year.

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On the merchandising front, JCPenney said improved in-stock rates and a better assortment mix that included more national brands helped to enhance its value messaging. The strongest performing private label brands were Liz Claiborne and Stafford. National brands that resonated well with consumers were Adidas, Carter’s, Haggar, Levi’s and Van Heusen.

The mass merchandiser was able to narrow its net loss to $17 million in the third quarter versus the year-ago wider net loss of $30 million. But total revenues were down 6.2 percent to $1.5 billion from $1.6 billion in the same year-ago period. Included in total revenue was an 8 percent decline in net sales to $1.41 billion from $1.53 billion, with the balance comprised on credit card income. The retailer said gross margins for the quarter were essentially flat, inching up just 0.2 percent to 38.7 percent from 38.5 percent in the year-ago quarter.

And for the nine months, the net loss was more worrisome after widening to a net loss of $113 million from a net loss of $11 million. Moreover, total revenues were down 8.1 percent to $4.46 billion from $4.85 billion a year ago, which included an 8.1 percent decrease in total net sales to $4.25 billion from $4.63 billion.

JCPenney ended the quarter with 123 locations. It ended the quarter with $1.4 billion in liquidity.

Last year, the retailer said it would invest more than $1 billion—via self-funding through its own operations—into the business by fiscal year 2025 to improve stores, the website, customer experiences and operational efficiencies.

The mass merchant filed for Chapter 11 bankruptcy court protection in the aftermath of the COVID pandemic in 2020. It was subsequently acquired by its two major mall landlords, Simon Property Group and Brookfield Property Partners. The sale helped the struggling retailer reduce its debt from $5 billion to $500 million.