J.C. Penney Posts a Better-Than-Expected Quarter

(The Dallas Morning News/MCT) -

J.C. Penney reported second-quarter results that were better than the market had expected. The company also said that CEO Mike Ullman is recovering from “a surgical procedure.”

The Plano, Texas-based retailer reported a sales gain of 6 percent and significantly narrowed its loss. Penney’s stock rose 3.2 percent to $10.05 in after-hours trading Thursday, after having ended the regular trading session up 39 cents, or 4.2 percent, at $9.74 a share.

The retailer reported a net loss of $172 million, or 56 cents a share, in the period ended Aug. 2, compared with a net loss of $586 million, or $2.66 a share, a year ago.

Analysts surveyed by Thomson Reuters had forecast a loss of 93 cents a share and a sales increase of 4.6 percent to $2.79 billion.

Penney generated free cash flow of $76 million during the quarter, which represents a $1.2 billion improvement from a year ago.

Ullman said turnaround initiatives continue to produce improved financial results.

“In the second quarter, we gained additional market share while significantly increasing gross margin in a highly competitive promotional environment,” Ullman said in a press release.

Total second-quarter sales of $2.8 billion compared with $2.66 billion last year. Online sales totaled $249 million, up 16.7 percent.

Traffic is still down from a year ago, but improved from the first quarter. Stores converted more shoppers into buyers, said chief financial officer Ed Record.

Penney increased its gross margin to 36 percent from 29.6 percent last year. Inventory is down 9.7 percent from a year ago, when stores were still clogged with merchandise that was being discontinued.

Analysts on the conference call wished Ullman a speedy recovery, but didn’t seem concerned about his absence. J.C. Penney spokeswoman Daphne Avila said the surgery “is related to a medical condition he has had for more than 20 years.”

Ullman expects to return to work soon, she said.