JC Penney Announced Financial Results for Its First Quarter Ended May 3, 2014

J. C. Penney Company, Inc. announced financial results for its first quarter ended May 3, 2014.

First Quarter Highlights:
-Same store sales increase 6.2%, exceeding guidance; second consecutive quarter of growth
-Gross margin improved 230 basis points from same quarter last year
-SG&A savings of $69 million; 490 basis point improvement from last year
-New upsized credit facility further strengthens Company's financial position
-Opened 30 new Sephora inside JCPenney locations, bringing total to 476

Myron E. (Mike) Ullman, III, Chief Executive Officer said, "We are very pleased to report that JCPenney delivered its second consecutive quarter of comparable store sales growth, as well as continued gross margin improvement. It is clear that our efforts to re-merchandise many areas of the store and revamp our messaging to the customer are taking hold.

"Despite a difficult retail environment, our strong performance during the Easter holiday period and other key promotional events enabled us to deliver better than anticipated sales results. We expect to carry this momentum into the second quarter as we continue to position the company for long-term profitable growth."

Financial Results
For the first quarter, JCPenney reported net sales of $2.80 billion compared to $2.64 billion in the first quarter of 2013. Same store sales increased 6.2% and improved sequentially each month within the quarter.

The Company said that, going forward, it will simplify its same store sales calculation to better reflect year-over-year comparability. Certain items, such as sales return estimates and liquidation sales, will now be excluded from the Company's same store sales calculation.  Under this new methodology, comparable store sales in the first quarter rose 7.4 %, which includes online sales that grew 25.7 % over the same period last year.  For the full year, the Company expects the new sales reporting methodology to have a 10 to 20 basis point impact.

Women's and Men's apparel, Home, and Fine Jewelry were the Company's top performing merchandise divisions in the quarter. Sephora inside JCPenney also continued its strong performance.  Geographically, all regions delivered sales gains over the same period last year with the best performance in the western and central regions of the country.

For the first quarter, gross margin was 33.1 % of sales, compared to 30.8 % in the same quarter last year, representing a 230 basis point improvement.  While better than last year, gross margin was negatively impacted by an increase in clearance sales as a percentage of total sales in February and March, aswell as negative clearance margins. Gross margin improved sequentially throughout the quarter, and the clearance sales mix returned to historic levels by quarter end.