J.C. Penney's turnaround is gaining traction.
The department store chain said Friday that its losses narrowed in the second quarter on better-than-expected sales, fueled by men's clothing, fine jewelry and the beauty brand Sephora. And a key revenue measure rose for the third straight quarter.
"Although there is much work to do … it's clear that when we execute well, we can deliver profitable sales and take market share," said Marvin Ellison, a former Home Depot executive who took over as CEO on Aug. 1 and presided over his first earnings call for Penney.
The results offer encouraging signs for the Plano, Texas-based retailer, which is more than two years into an effort to recover from a disastrous attempt to reinvent itself under former Apple executive Ron Johnson. That led to massive losses and plummeting sales.
Ellison took over the top job from Myron Ullman, who became executive chairman of the board. Ullman, who had previously run the company, came back as CEO in 2013 after Johnson was pushed out. Ullman helped pick Ellison, and the two executives have been running the company together since last November.
But J.C. Penney still has an uphill road to a full recovery.
Ullman stabilized the business by restoring frequent discounts and bringing back basic merchandise and popular store brands that Johnson eliminated. But sales are still well below where they were before he took over, and the retailer continues to rack up losses, though they're shrinking.
J.C. Penney lost $138 million, or 45 cents per share, for the quarter that ended Aug. 1. That compares with a loss of $172 million, or 56 cents, a year earlier.
Losses, adjusted for one-time gains and costs, were 41 cents per share.
Revenue rose 2.7% to $2.88 billion.
The average estimate of analysts surveyed by Zacks Investment Research was for a loss of 50 cents per share.
Revenue also topped analyst forecasts of $2.86 billion.
Revenue at stores opened at least a year rose 4.1%, in line with analysts' estimates.