Why JCPenney is counting on Rihanna
JCPenney's aggressive efforts to woo shoppers back are working, and the retailer is hoping Rihanna can drive even more growth.
The retailer attributed impressive third quarter sales results to strong sales in its Sephora, Women’s Specialty and Salon divisions.
“During the third quarter, we took aggressive actions to clear slow-moving inventory, primarily allowing for an improved apparel assortment heading in to the Holiday season. While these actions had a negative short-term impact on profitability in the third quarter, we firmly believe it was the right decision for the Company as we transition into the fourth quarter and fiscal 2018," CEO Marvin R. Ellison, chairman and chief executive officer said."
Ellison said he projects that the new beauty line, Fenty Beauty by Rihanna, will drive holiday sales.
For the third quarter ended Oct. 28, the company said same store sales rose 1.7 percent, compared with the 0.6 percent to 0.8 percent it had forecast last month. JCPenney last month also slashed its full-year forecast as it sold stagnant apparel inventory at heavy discounts amid an overhaul of its women’s section.
JCPenney’s net loss widened to $128 million, or 41 cents per share, in the quarter, from $67 million, or 22 cents per share, a year earlier, partly because of heavy discounting to clear slow-moving inventory. Net sales fell about 2 percent to $2.81 billion.
Appliances drove overall sales growth. The category increased 128% in sales in the third quarter, according to Ellison in the earnings call. In the third quarter, 38 new Sephora locations opened inside existing stores. Geographically, the Gulf Coast and Midwest were the best performing regions of the country.
"We are encouraged that we delivered positive sales comps for the third quarter. Our growth strategies and new apparel initiatives led to sequential comp sales improvement in nearly all merchandise categories in the third quarter, giving us confidence that our overall strategy and transformation is beginning to take hold. While we have more work to do, we remain focused on two critical factors - to operate the business for growth and deliver positive earnings. We’re committed to making the right strategic decisions to ensure we are providing our customers more reasons to shop and experience JCPenney," Ellison said.