JCPenney has a long way to go before it’s a turnaround story. But the company had some rare good news Friday: It was able to trim its losses in the third quarter, and it raised its profit forecast, even as its sales continue to fall.
The company reported an operating net loss of $97 million in the quarter. That’s 41% smaller than the loss it recorded in the same quarter a year earlier. In 2019, JCPenney has lost $300 million.
“We made significant progress on our efforts to return JCPenney to sustainable, profitable growth,” CEO Jill Soltau said in a prepared statement.
Sales at stores open at least a year fell 9.3%, mostly because the company stopped selling appliances and furniture. Excluding the exit from those categories, sales its remaining stores fell 6.6% in the quarter.
Still, JCPenney (JCP) raised its forecast for a full year operating profit to more than the $475 million. That had been the top of its previous earnings range. And the battered shares of JCPenney (JCP), which are in danger of being delisted due to their low price, jumped 14% in premarket trading on the news.
The 117-year old retailer has not posted an annual profit since 2010. It has been able to make money only during the holiday shopping season, and it has been losing money the other nine months of the year. It has been forced to close about 200 stores, or 20% of its total, over the last four years.
An estimated $2.1 billion in loan payments come due in 2023, and that has credit rating agencies and analysts worried.
One thing JCPenney seems to have going for it: A CEO that Wall Street backs. Soltau, who took over last year, has installed new leaders at the company and pitched investors on “reimagined” concept stores that include styling services and yoga classes.
“It finally seems to have a leader that understands retail and knows the direction the company needs to take,” said Neil Saunders, analyst at GlobalData Retail. “The question is whether it has the resource and energy to complete its journey.”