After so many months of lethargic growth from retailers, we're finally seeing things pick back up, thanks in part to back-to-school season. But while fellow department-store chain Macy's (NYSE:M) just reported a 2.4% gain in same-store sales, J.C. Penney (NYSE:JCP) hasn't quite gotten on the bandwagon yet. It posted a 4% drop in August comps.
Don't sweat the results, though. Management said things were a bit off from a strange calendar shift that placed the first week of August sales into July's numbers. According to the company, back-to-school items actually performed well, including hoodies, shorts, and the ever-popular five-pocket denim jeans. I know that the company's buy-one-get-one-for-a-penny sale helped with the back-to-school shopping I did for my kids.
More importantly, management reaffirmed its sales guidance for the next two months. Same-store sales for this month are expected to experience a low-single-digit rise and increase by the mid- to high single digits for October -- this, despite what management cites as a "challenging macro-economic environment."
Over the past several years, J.C. Penney has done a remarkable job of getting its core customers back by bringing in more merchandise that people want to buy. A novel concept, I know. It seems so simple, but really, it's very difficult to get right. Competitor Kohl's (NYSE:KSS) can attest to that.
I like what J.C. Penney has done. I'll admit that I was skeptical when I first heard a few years ago that it was trying to change its image. But given its results since then, I've long since been converted. It's still early in the quarter, and we don't know whether the margins held up, but if there weren't a ton of promotions, and sales come in as management predicts, we could see a nice earnings surprise. At a price-to-earnings ratio of 13, the stock might just be an early Christmas present.
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