JCPenney reported a net loss of $96 million in the second quarter, which ended August 3, as same-store sales declined 7.7 percent. The loss compares with earnings of $19 million a year ago. Net sales declined 8.9 percent to $1.53 billion from $1.68 billion.

In the financial filings for Penney Intermediate Holding, JC Penney’s holding company, the retailer reported that overall traffic remained soft during the period, but store visits continued to improve compared to 2023.

The relaunch of the JCPenney Rewards Program at the end of the first quarter added over 830,000 new rewards members and over 30,000 new credit customers during the period. The retailer reported that store net promoter scores improved by over four points compared to last year for the same period.

Among merchandise categories, JCPenney’s private label brands, including St. John’s Bay, Modern Bride and Thereabouts, outperformed expectations during the quarter, with Liz Claiborne outpacing year-ago results. JCPenney has an exclusive on Liz Claiborne.

JCPenney added, “National brands continue to be an important part of the mix with partners such as Izod, Van Heusen and Adidas exceeding expectations for the period, while partners Levi’s and Gloria Vanderbilt drove increases in women’s denim.”

The Beauty category continued expanding its premium brand offerings, including lines for NYX, Duck Plum, Too Faced, BareMinerals, Macadamia, and Professional.

Fragrance sales jumped 30 percent due to new fragrances added to its inventory from Carolina Herrera and Paco Rabanne and exclusive lines from David Beckham and Nicki Minaj.

Gross margins improved 70 basis points to 39.4 percent due to a change in channel mix and additional freight and e-com-related expense savings. Improving inventory efficiency remained a key focus, and as a result, inventory was down 2 percent from last year.

SG&A expenses increased slightly to $605 million from $601 million as the impact of a timing shift related to marketing was nearly all offset by cost savings. As a percent of sales, SG&A increased to 39.6 percent of revenues from 35.6 percent a year ago due to sales deleverage. The operating loss was $14 million versus operating income of $55 million in the year-earlier quarter.

JCPenney said it continues to prioritize maintaining a healthy balance sheet, which had liquidity of $1.7 billion at the close of the quarter. The retailer has less than $500 million of outstanding long-term debt and, as of the end of the period, no outstanding borrowings under its credit line.

The retailer emerged from Chapter 11 bankruptcy in December 2020 in a deal that left Simon Property Group and Brookfield Asset Management, Inc. as owners and operators of the department store chain.

JCPenney operates 661 stores in 49 U.S. States and Puerto Rico.

Image courtesy JCPenney