JCP reveals an upside surprise

Yesterday (Jan. 6th, 2015) JCPenney discussed a comp-store gain of almost 4% during the November-December period. This is a positive surprise considering flat expectations after the last earnings call. RetailWire panelists discussed what further challenges face JCP, and I offered the following point of view:

JCP has focused on error correction to undo a lot of the damage inflicted during the Ron Johnson era. (I’ve described it as “Turn back the clock.”) The holiday sales report is a good upside surprise, considering the flat 3rd quarter and suggestion (on the last earnings call) that November started off slowly. These numbers probably bode well for other retailers, too, especially if they had soft 2013 comparisons.

I’m still not convinced, however, that JCPenney has it all figured out. They may have hit on the right promotional cadence, but the merchandising (especially in the women’s zone) looks overassorted, as it did back in 2010-11. And the company under its new leadership will need to take more aggressive steps to address its uncompetitive SGA model, not just relying on rising gross margins.

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