Overall, I believe that it was good news for the longs (such as myself). However, skepticism is still hanging in there as the material results were disappointing and the only good news are the trends that seem to be improving but are yet to show on the quarterly results.
As promised, I will give you, what I believe are the most important things from the conference call and quarterly results for your review.
- Mike Ullman the CEO mentioned that "the turnaround for J.C. Penney is beginning to take hold"
- He also said that during the third quarter "we began generating positive sales momentum". Nevertheless, those positive sales trends are not yet materialized and reflected into this quarter results.
- Margins on sales are not yet improving. In fact, they are deteriorating based on the same period last year. The only positive sign here is that on October margins did improve sequentially from the previous month. Ullman attributed this to the need of inventory markdowns related to the previous strategy that the ousted Ron Johnson has put in place.
- Suppliers of JCP are not pulling the plug on them as it may have been mentioned on "inaccurate reports" Ullman said.
- Sales on JCP.com were up 24.5% y-o-y compared to a (2.2%) in the second quarter. This trend was even better on the month of October to a 37.6 %
- Store traffic improved sequentially but still remained negative on a y-o-y basis.
- Gross margins are expected to improve sequentially and y-o-y on Q4, the CFO said.
- The CFO also mentioned that the expected liquidity of the company at year's end is still expected to be above 2 billion.
Disclosure: I do not receive any type of compensation from anyone for this blog/post. I am long JCP. Parts of the conference call transcript where obtained through Seeking Alpha