JC Penney sales beat estimates, helped by home goods, Sephora

These cuts would eliminate almost 9 percent of the jobs at the retailer’s home office in Plano, Texas.

Penney said earlier this week that its same-store sales in the quarter rose a more-than-expected 6.4 percent. The company had revenue of $2.88 billion for the quarter, compared to analyst estimates of $2.86 billion. J.C. Penney’s stock likely also got swept into the negative sentiment surrounding the department store sector this week, following disappointing results from Macy’s (M – Get Report) and Nordstrom (JWN – Get Report) that crushed each company’s stock. Compared to analyst expectations just before the announcement, the actual results were $0.09 away from that number, or a surprise factor of 18%.

J.C. Penney’s net loss narrowed to $137-million, or 45 cents per share, in the third quarter ended October 31, from $188-million, or 62 cents per share, a year earlier.

The retailer said comparable-store sales grew by 6.4 percent, while analysts polled by FactSet expected a 5.7 percent increase. Macy’s blamed its sales decline in the third quarter partly on warmer than normal weather, which it said hurt sales of items like coats and boots.

Gross margin expanded 70 basis points from a year ago to 37.3 percent of sales, driven by improvements in clearance and promotional selling margins as well as supply chain productivity.

Instead, shares of the department store retailer plunged as much as 16% on Friday as investors zeroed in on another loss for J.C. Penney despite a strong quarter of sales. Analysts had forecast a steeper loss of 58 cents per share, according to Zacks Investment Research.

The company is expressing confidence in its ability to compete in the upcoming holiday shopping season. J C Penney Company has a 52-week low of $5.90 and a 52-week high of $10.09.

Net sales rose 4.8 per cent to $2.90-billion.

Despite the solid performance, JC Penney shares plummeted more than 9% in early-market trading today, reflecting concerns about the broader retail industry.

“When you survey our customers, they believe that they are national brands”, said CEO Marvin Ellison, who joined the company a year ago.

Up to Thursday’s close of US$8.79, Penney’s stock had risen more than 35 percent this year.