Shares of J.C. Penney Co. Inc. shot up more than 18 percent in early after-hours trading Tuesday following the midtier department store’s report of a 3.7 percent increase in same-store sales for November and December.

This story first appeared in the January 7, 2015 issue of WWD. Subscribe Today.

The company now expects fourth-quarter comparable-store sales to grow at the upper end of its previous guidance for an increase of between 2 and 4 percent.

Praising employees’ “hard work, warrior spirit and commitment to delivering an exceptional customer experience every day,” chief executive officer Myron “Mike” Ullman III commented, “Our highest priority over the last year has been to restore profitable sales growth at J.C. Penney. This holiday season was instrumental in that effort, and our teams delivered.”

Ullman is expected to retire and be succeeded by Marvin Ellison in August.

Penney’s shares, up 1.9 percent to $6.56 during the regular trading session, rose 18.3 percent to $7.76 in the first 90 minutes of after-hours trading following the announcement.

The disclosure stood in marked contrast to a press release issued at about the same time last year, when Penney’s said it was “pleased with its performance for the holiday period, showing continued progress in its turnaround efforts” and reaffirmed its earlier fourth-quarter outlook. A week later, Penney said it would close 33 underperforming stores and in early February reported a 3.1 percent increase in comps for the November-December period and a 2 percent increase in quarterly comps, its first upward movement since the second quarter of 2011, just before the ill-fated tenure of Ron Johnson as ceo began.

Based on its polling of analysts, Retail Metrics Inc. had expected a 2.7 percent comp increase from Penney’s during the current fourth quarter.

The holiday increase hardly erases the enormity of the task still ahead for Penney’s. If the company were to match analysts’ expectations for fourth-quarter sales of $3.82 billion and finish the year with revenues of $12.18 billion, that would represent a 2.7 percent increase from the prior year but be 6.2 percent below the $12.99 billion in sales registered in 2012, 29.4 percent below the $17.26 billion recorded in 2011 and 31.4 percent below the $17.76 billion logged in 2010.

The upbeat report from Penney’s came in advance of what is expected to be a swarm of updates from other retailers surrounding Thursday’s reports on monthly sales from the small sample of publicly held retailers who continue to report them, a group now dominated by Costco Wholesale Corp., Gap Inc. and L Brands Inc. Last year, such supplemental comp reports came not only from Penney’s but also Macy’s Inc., Target Corp., Stage Stores Inc. and a substantial number of stores in the troubled teen sector, including the so-called Three A’s — Abercrombie & Fitch Co., American Eagle Outfitters Inc. and Aéropostale Inc. — as well as Urban Outfitters Inc., Ascena Retail Group Inc. and Express Inc.

A number of those expected to provide updates would be doing so in advance of their appearances at next week’s ICR XChange Conference in Orlando, Fla.

While hardly spectacular, expectations for December comps are fairly strong. Thomson Reuters estimates a 3.7 percent median increase among comp reporters and Retail Metrics expects the average increase to be 3.9 percent. Both figures were reduced in recent days due to more modest expectations for Costco, which has seen its comps put at risk by falling gas prices and overall revenues in jeopardy because of the strength of the dollar against the euro.

Ken Perkins, president of Retail Metrics, continues to expect year-on-year growth in earnings per share for the fourth quarter to come in at about 7.9 percent, a figure that would rise to 12.9 percent without the expected EPS result of Wal-Mart Stores Inc., whose profit results are weighted to reflect its enormous volume.

“Given the precipitous decline in gas prices coupled with improved employment and solid economic growth, we would expect retailers to surprise on the upside relative to modest current expectations,” Perkins said. “Retailers do not have the luxury of macroeconomic excuses for poor performance this year, other than the lack of wage increases accrued to consumers this past year.”

The increased earnings expectations were helped in part by the continuing decline in the price of gasoline — down $1.12 a gallon from a year ago to an average of $2.21 — offset by relentless margin pressure, Perkins said.

He added that, with customers focused on automobiles and electronics, “apparel seems to have taken a back seat in terms of consumer interest,” a situation made worse by a “lack of any overriding fashions that have sparked consumers’ interest for some time, as well as softer mall traffic.”

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