NEW YORK (TheStreet) - J.C. Penney (JCP) shares gained 2.6% to $7.91 after the department store chain's comparable sales in September were an improvement from August, fueled by online sales. The company gave indications sales trends were expected to continue for the rest of the year.
J.C. Penney said September comparable store sales rose 580 basis points over August numbers, but were still down 4% compared to September 2012. Sales on jcp.com jumped 25.3% last month, on top of a 10.8% rise in August. Online sales have risen 18.6% so far in the third quarter.
The comparable sales trend is expected to continue for the rest of the year, the company said in a press release early Tuesday.
It's been quite a year for J.C. Penney. From ousting its former CEO Ron Johnson over poor store performance under his leadership and changes to dealing with activist investor Bill Ackman of Pershing Square Capital to as of last week, filling the coffers once more through an equity offering, the stock has been on a roller coaster.Investors were cheering the incremental improvement early Tuesday. However, the stock as of Monday's closing price is trading at a 28-year low. Investors seemed to shrug off a downgrade by Sterne Agee's equity analysts on Tuesday to "neutral" from "buy," based on the retailer's ongoing struggles. "While we always framed the JCP call as 'not for the faint of heart,' the combination of: uninspiring observations from our recent store checks, today's more challenging apparel/retail backdrop, and most important,our fears that the former CEO Ron Johnson may have permanently 'fired' JCP's core customer, lead us to downgrade to neutral," Sterne Agee analyst Charles Grom writes in a research note on Tuesday. "Net, while we tried to fade consensus, recent developments leave us less comfortable sticking our necks out." J.C. Penney reiterated in the release a number of strategic initiatives it is pursuing in order to return to profitability. J.C. Penney's women's and men's apparel, fine jewelry and women's accessories categories are performing better than the company's average. The struggling retailer said women's apparel, its largest business, reported positive sales for the month of September. Despite the improvements, gross margins "continue to be impacted" by lower clearance margins due to the overhang of inventory from the first half of the year, higher levels of clearance units sold during the period, as well as the company's transition back to a promotional pricing strategy during the second quarter, it said. "Reconnecting with our customers and getting them into our stores is a top priority," CEO Myron 'Mike' Ullman said in a statement. "Our enhanced messaging is reminding shoppers that JCPenney's offering of trusted private brands, key national brands and unique attractions sets us apart from the competition," Ullman continued. "Over the last six months, we have made significant strides and are now seeing positive signs in many important areas of the business, in spite of what continues to be a difficult environment for consumers and retailers in general. While pleased with the improving trends and more predictable performance, we are still in the early stages of the turnaround and will maintain a relentless focus on achieving our long-term goals for the benefit of our customers, associates and shareholders."
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