J.C. Penney says Sept same-store sales show improving trend

Reuters

Oct 8 (Reuters) - Struggling department store operator J.C.Penney Co Inc reported a smaller decline in same-storesales for September, compared to August, and said it expectedimproved sales trends to continue for the remainder of the year.

The company, whose shares rose as much as 5 percent in earlytrading, has been struggling since a failed attempt last year bya former chief executive to take the chain more up-market.

Sales fell 25 percent in 2012, while the stock has lostabout 80 percent of its value since former CEO Ron Johnsonimplemented the makeover that has since been rolled back.

A Penney spokeswoman said the company had issued the updateon its performance because it wanted to give investors a moredetailed account of its progress given market speculationsurrounding its turnaround.

The company said on Tuesday that while September same-storesales fell 4 percent over the same month last year, they showedan improvement from a 9.8 percent decline in August.

"It's reassuring, at least, that they're limiting the(sales) decline," Atlantic Equities analyst Daniela Nedialkovasaid, adding that it was in line with her expectations.

Women's and men's apparel, fine jewelry and women'saccessories were performing better than average, the companysaid. Women's apparel, Penney's largest business, also hadpositive sales in September.

"Over the last six months, we have made significant stridesand are now seeing positive signs in many important areas of thebusiness, in spite of what continues to be a difficultenvironment for consumers and retailers in general," ChiefExecutive Myron Ullman said in a statement.

The company said inventories of higher-margin private brandssuch as St. John's Bay and Stafford and its assortment of basicapparel were well-stocked to meet holiday season demand.

Ullman said he was also encouraged by the performance ofsuch national brands as Levi Strauss and Nike, which were significantly ahead of last year.

Levi Strauss Chief Executive Chip Bergh told Reuters lastweek that sales of Levi's products at Penney had risen by adouble-digit percentage last quarter.

Sales at Penney's home goods section continued to struggleas the merchandise assortment, shopping environment and pricepoints did not resonate with customers, the company said.

The retailer said it was working to create a more balancedassortment of modern and traditional home furnishings.

Gross margins were hurt by clearance sales to reduceinventory from the first two quarters of the year, as well as bythe company's transition back to a promotional pricing strategy.

Ullman, appointed CEO in April, has largely restoredPenney's original strategy, which focuses on deep discounts andcoupons.

Penney reiterated that it would end the year with more than$2 billion in cash, after taking into account proceeds of $785million from a recent stock sale.

Penney shares were up 4 percent at $7.98 in early trading onthe New York Stock Exchange.

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