J. C. Penney Co. Inc. reported total company sales increased 13.3% for the four weeks ended Aug. 4, including a 13.6% increase in total department store sales. Comparable department store sales increased 10.8% following a 4.9% increase last year, and compared to guidance for sales to increase low-double digits to mid-teens.
As previously communicated, current month sales benefited from calendar shifts resulting from last year's 53rd week that moved sales for the first week of August, an important Back-to-School selling period, into the July reporting period.
For the month, comparable department store sales increased at least mid-single digits across all merchandise divisions and high-single digits in all regions of the country. Management said was pleased with early results across Back-to-School merchandise categories, as well as the positive customer response to recent promotional events in fine jewelry and home, including furniture. On August 3rd, the company opened 14 new or relocated stores, of which 12 stores are in the company's off-mall format. Seven of the new stores offer Sephora inside JCPenney.
Internet sales through www.jcp.com increased 28.4% for the month, on top of a 21% increase last year. Total Direct sales increased 11.5%, which exceeded management's most recent guidance for a low-single digit sales increase. Direct sales for the month also benefited from the calendar shift related to last year's 53rd week and enhanced clearance/promotional activities.
Third Quarter Sales Guidance
For the third quarter, management expects both comparable department store and Direct sales to increase low-single digits. Consistent with second quarter sales patterns, management reiterated that calendar shifts due to last year's 53rd week will continue to have a significant impact on reported monthly sales.
Sales guidance by month for the quarter is as follows:
August: Because sales for the first week in August – which is a significant Back-to-School week – were reported in this year's July period, guidance for the August reporting period is for a mid- to high-single digit decrease in comparable store sales, while Direct sales are expected to increase low-single digits. In last year's August period, comparable department store sales decreased 0.5% and Direct sales increased 0.5%.
September: Sales are expected to increase low-single digits for both comparable department stores and Direct.
October: Comparable department stores are expected to increase mid- to high-single digits in October due a promotional event in the first week of November that will be included in this year's October reporting period. Direct sales are expected to increase low-single digits.
JCPenney operates 1,048 department stores throughout the United States and Puerto Rico, as well as one of the largest apparel and home furnishing sites on the Internet, jcp.com, and the nation's largest general merchandise catalog business.
Preliminary July Sales Summary
($ in millions)
Period ended All Stores Comp Stores
——————- ————– ————
Aug 4, July 29,
2007 2006 2007 2006 2007 2006
——– ——— ——- —— —— —–
Department stores $1,201 $1,057 13.6 5.5 10.8 4.9
Direct 203 182 11.5 0.0
Total Company $1,404 $1,239 13.3 4.6
Department stores $3,797 $3,631 4.6 7.1 1.9 6.6
Direct 593 607 (2.3) 2.7
Total Company $4,390 $4,238 3.6 6.5
Department stores $7,488 $7,166 4.5 4.6 2.1 3.9
Direct 1,253 1,292 (3.0) 3.4
Total Company $8,741 $8,458 3.3 4.4