I posted the following comment at RetailWire shortly after JCPenney released its Q2 numbers. While the performance is headed in the right direction, the comparisons and benchmarks look very easy. And I find on store visits that the merchandise execution is still lacking in consistency. Here’s my point of view:
Count me as a skeptic, because the Q1 numbers were also met with the same “turnaround” narrative before analysts gave JCP’s competitive posture a closer look. Yes, the 6% comp gain looks better than most, but is still 5% below (terrible) 2012 levels. Yes, the gross margin and SGA show worthy improvements over Q1 levels but the company is still losing money.
Until JCP can figure out how to drive gross margins into the upper 30’s (not a stretch) and SGA closer to 30.0% (quite a reach), they are not going to deliver the sort of operating profit they need for the long haul. I continue to believe that the company needs to move faster on store closings, as well as finding a CEO who can do more than just unwind the errors of the Ron Johnson era.