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J.C. Penney is a retailer operating more than 1,000 department stores in just about every state in the U.S. and Puerto Rico. Its business consists of selling merchandise and services to consumers through its department stores and website. It sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora, and home furnishings. The company has not done too well in recent years, but it is doing what it can to be a top provider of apparel and related products.
The news release for J.C.Penney’s first-quarter’s sales and earnings was very encouraging. Sales were up, same store sales increased by 6.2 percent. As a result selling costs were more in-line resulting in a major 400 basis point improvement in the expense ratio over the previous year. With much of the private label merchandise now in stock, gross margin also improved 230 basis points. During the earnings conference call with investors, we were told that apparel for men and women and children were among the strongest areas and that the accessories and jewelry also did well. There will be greater contribution by Sephora going forward. During the quarter 30 new locations were added in J.C.Penney stores and 8 shops were increased in size. The Sephora count is now it 476 units in operation.