J. C. Penney Company, Inc.'s comparable store sales decreased 13% for the four-week period ended Nov. 1. The company's guidance was for sales to decrease low-double digits. Total sales fell 11.8% to $1.36 billion from $1.54 billion.
J.C. Penney’s October Comps Plunge 13%
In last year's October period, comparable store sales decreased 1.0%. Total company sales in October decreased 11.8%. October results were impacted by ongoing declines in mall traffic and a pronounced slowdown in consumer spending, which continues to be influenced by financial market volatility and tightening credit availability. For the month, the Company noted: — October sales were weakest during the first week and improved relative to expectations over the course of the month.
Sales in the last week of the month were impacted by the shift of the Company's annual “Biggest Sale of Them All” event to the November reporting period this year from the last week of October in 2007. The shift of this event lowered October comparable store sales results by approximately 500 basis points. — On a relative basis, JCPenney's apparel divisions continued to be its strongest performers with the women's and children's apparel and women's accessories divisions delivering the best results in October.
Additionally, the company stated that despite the challenging economic conditions, JCPenney's recently launched private brands are achieving early success, notably Decree in juniors, Flirtitude in intimate apparel, Linden Street in home and the re-launches of the Worthington brand for women and Stafford for men during the past month. And, Sephora inside JCPenney continues to be well received as it is rolled out to additional stores.
The retailer said this relative strength was offset by continued softness in sales performance in the home and fine jewelry divisions. These categories negatively impacted store sales as well as catalog and Internet performance, for which home merchandise comprises a significantly greater proportion of sales than in stores.
Although sales were challenging across the country, the northeast and central regions delivered the strongest performance, while the southeast and southwest regions experienced the softest results during the period. In particular, business continues to be the most challenging in those areas where the negative impact on housing markets has been the greatest.
For the third quarter, the company expects to report a total inventory decrease of approximately 6%, despite the addition of 35 new stores since last year's third quarter. On a comparable store basis, inventory is expected to be down approximately 9%. Management is comfortable that the inventory position will support the “Biggest Sale of Them All” event at the beginning of November and is in general alignment with both the company's year-to-date performance and expected trends for future comparable store sales levels for the remainder of the year.
Reflecting the company's expectation for continued sales weakness in light of consumer sentiment, management's guidance for the four-week period ending Nov. 29, 2008, is for a low-double digit decrease in comparable store sales, compared with a 5.4% increase during the same period last year. Comparable store sales in November will benefit from the previously discussed promotional event shift, but will be offset by the calendar shift that eliminates a full week of post-Thanksgiving sales from the reporting period. Based on October sales results and continued strong expense control, management now expects earnings for the third quarter to be in a range of 53 to 55 cents per share, including a benefit of approximately $0.02 per share from the sale of non-operating real estate during the period. The company's most recent guidance was for third quarter earnings to be in a range of 50 cents to 60 cents per share.