J. C. Penney Company Inc.’s stock is in the green following news that it significantly narrowed its losses as well as forged a partnership with fashion resale giant ThredUp.
As of 10:30 a.m. ET, shares were up more than 10% to $0.63 — good news for the retailer after months of declining shares pushed JCPenney’s stock below $1, putting it at risk of delisting from the New York Stock Exchange.
During the second quarter, the Plano, Texas-based company’s revenues declined more than expected, dropping 7.4% to $2.62 billion. (Analysts had forecasted revenues of $2.69 billion.) However, JCPenney managed to reduce its losses from $101 million the previous year to $48 million, or 15 cents per share. That figure was better than Wall Street’s predicted loss of 31 cents a share.
“Notably this quarter, the meaningful improvement we delivered in cost of goods sold was driven by lower permanent markdowns, improved shrink results, increased store and online selling margins and the exit of major appliance and in-store furniture categories,” said CEO Jill Soltau. (Same-store sales fell 9% during the quarter ended Aug. 3, or 6% minus the impact of retreating from its appliance and furniture business.)
Along with its financial announcement, the retailer also revealed a partnership with online consignment platform ThredUp, with 30 JCPenney stores soon offering a selection of secondhand women’s apparel and accessories to be curated weekly.
“With the rise of online resale markets, there’s no doubt that demand for great value on quality brands is at an all-time high,” said Michelle Wlazlo, JCPenney’s EVP and chief merchant. “We’re excited about the prospect of creating a new in-store experience that makes high-end brands attainable, as well as catering to eco-minded consumers who want more sustainable options in their wardrobe.”
Less than three weeks ago, the retailer was added to Fitch Ratings’ “loans of concern” list, marking another sign of its compounding financial struggles. The credit rating agency found that JCPenney was at a high risk of defaulting on a $1.57 billion loan balance, with U.S. Securities and Exchange Commission filings putting its debt at roughly $4 billion.
The company also said recently that it has hired advisors to explore debt restructuring options to buy itself more time for a turnaround. After taking the helm in October, Soltau has made a concerted push toward JCPenney’s retail makeover, nixing a few dozen underperforming stores and hiring new talent at the start of the year.
“While we still have work to do on our top line, I strongly believe that growing sales in an unprofitable way is simply not an option,” Soltau said. “The only way I know how to reconstruct a business is through a holistic approach across all the key tenets of strategic, purposeful and effective retailing.”
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