JC Penney Q3 gross margin hits 29.5 percent of sales

REPORT_ For the third quarter, JC Penney gross margin

was 29.5 percent of sales, compared to 32.5 percent in the same quarter last year. Gross margin for the third quarter was negatively impacted by lower clearance margins due to the overhang of inventory from the first two quarters of the year, higher levels of clearance units sold, as well as the company’s transition back to a promotional pricing strategy as compared to last year’s strategy. Notwithstanding, gross margin did improve sequentially throughout the quarter.

For the third quarter, JC Penney comparable store sales declined 4.8 percent. Comparable store sales declined 4.8 percent for the quarter, which represented a sequential improvement of 710 basis points when compared to the second quarter of fiscal 2013. The quarter ended with a positive 0.9 percent comparable store sales gain in October.

For the fourth quarter of 2013 comparable store sales and gross margin are expected to improve sequentially and year over year and SG&A expenses are expected to be below last year’s levels.

JC Penney is based in Texas. Myron E. (Mike) Ullman, III, Chief Executive Officer of JC Penney, said, “Our strategies to reconnect with customers are beginning to take hold. We are proud of the company’s October sales performance, encouraged by the early weeks of November, and believe we are making strides toward a path to long-term profitable growth.”