JCPenney Is Optimistic about Same-Store Sales Growth in 2015

JCPenney's Upcoming 2Q15 Results: Should Investors Be Optimistic?

(Continued from Prior Part)

Expectations for fiscal 2015

On August 10, 2015, JCPenney (JCP) is expected to report its financial results for the second quarter of fiscal 2015, which ends August 1, 2015. After reporting a 3.4% growth in same-store sales in 1Q15, the company upgraded its guidance for same-store sales growth for the full year. Based on estimates released in May 2015, JCPenney expects its same-store sales in fiscal 2015 to grow by 4%–5% compared to the previous guidance of 3%–5%.

Macy’s (M) posted a 0.7% fall in its 1Q15 same-store sales. Nordstrom (JWN) and Kohl’s (KSS) reported 4.4% and 1.4% growth, respectively, in their 1Q15 same-store sales. Nordstrom makes up about 0.5% of the portfolio holdings of the Consumer Discretionary Select Sector SPDR Fund (XLY).

Same-store sales growth drivers

JCPenney’s same-store sales are expected to grow further, as the company is focusing on products that attract huge customer traffic. As part of its center core strategy, the company is focusing on fashion jewelry, shoes, handbags, intimate apparel, and accessories.

JCPenney is also focusing on enhancing its footwear department. Currently, only 26% of JCPenney’s female customers purchase shoes from its stores. To capitalize on this opportunity, the company is expanding the space allotted to women’s shoes. It’s also moving men’s shoes to the men’s department in an open-sell environment.

The company’s Sephora store-within-stores is one of the key aspects of its center core strategy. The Sephora stores within JCPenney offer a wide assortment of beauty products. Sephora is owned by the luxury group LVMH Moët Hennessy Louis Vuitton SE (LVMUY) (MC.PA). In 1Q15, JCPenney opened 23 new Sephora stores and expanded six existing locations. As of the end of 1Q15, there were 515 Sephora stores within JCPenney locations.

Other strategies

JCPenney is implementing other strategies to improve store traffic and increase same-store sales such as the buy online, pick up in store strategy. A focus on home merchandise is also a key priority.

In the next article, we’ll look at the company’s online business strategy.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Can JCPenney Post Sales Growth in 2Q15?

• Part 2 - Can JCPenney Continue to Trim Its Losses in 2Q15?

• Part 3 - Factors That Might Improve JCPenney’s Margins in 2Q15