J. C. Penney Company, Inc. saw its seventh consecutive successful Back-to-School selling season, with comparable department store sales increasing 2.4% for the combined months of July and August.
For the August reporting period, comparable department store sales decreased 4.0%, which was better than guidance for a mid- to high-single digit sales decrease. Both July and August sales were distorted by the calendar shift that moved sales for the first week of August, an important Back-to-School sales week, into the July reporting period. As previously reported, comparable store sales in the July period increased 10.8%. Reflecting the strength of the company's merchandise assortments for the Back-to-School season that began in mid-July, sales for junior's, young men's, boy's and girl's apparel, and children's shoes all increased at least mid-single digits.
Total Direct sales increased 3.6% for the four-week August period in line with management's most recent guidance for a low-single digit sales increase. Internet sales through www.jcp.com increased 23.9% for the month, on top of a 16% increase last year. Total company sales decreased 1.1%.
August sales results reflected good response to both regular priced and clearance merchandise. Department store sales were strongest in family shoes and men's and women's apparel. Geographically, the northeast, northwest, and southwest were the best performing regions of the country. In Direct, August sales benefited from improvement in both soft and hard home categories.
Sales Outlook
Looking ahead, the company recognizes the challenging macroeconomic environment and its potential impact on consumers. However, management remains focused on executing its long-range plan and is reaffirming its sales guidance for September and October. As previously noted, calendar shifts due to last year's 53rd week will continue to have a significant impact on reported monthly sales. September: Sales are expected to increase low-single digits for both comparable department stores and Direct. October: Comparable department store sales are expected to increase mid- to high-single digits due to 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.
Preliminary August Sales Summary
($ in millions)% Increase/(Decrease)
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Period ended All Stores Comp Stores
—————— —————– ————–
Sept 1, Aug 26,
2007 2006 2007 2006 2007 2006
——— ——– ———- —— —— ——-
4 Weeks
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Department stores $1,361 $1,386 (1.8) 0.7 (4.0) (0.5)
Direct 202 195 3.6 0.5
——— ——–
Total Company $1,563 $1,581 (1.1) 0.730 Weeks
——————
Department stores $8,849 $8,552 3.5 4.0 1.1 3.2
Direct 1,455 1,487 (2.2) 3.0
——— ——–
Total Company $10,304 $10,039 2.6 3.8
