J.C. Penney has managed to narrow its sales declines and return to profitability in the second quarter, with improved markdown management helping the department store offset higher distribution costs and tariffs.
According to recent financial filings, total net sales fell 3.4% year over year to $1.4 billion, while credit income rose 10% to $65 million.
Although the company did not disclose detailed comparable sales data, it said more stores recorded positive comps during the quarter.
Gross margin stood at 38.7%, slightly below last year’s 39.4%, driven by strength in basics and sleepwear, footwear, home, children’s and men’s categories.
J.C. Penney posted $110 million in net income for the quarter, a notable turnaround from the $33 million loss recorded a year earlier. Consolidated adjusted EBITDA climbed to $179 million, up sharply from $29 million in the same period last year.
“There is still softness in the numbers, but it seems like the sales declines might be starting to level off,” GlobalData Managing Director Neil Saunders told Retail Dive via email. “There are also a few rays of light in the metrics around comparable sales at certain stores and traffic and trips.”
The company reported improvements in both online and in-store traffic compared to the previous quarter, though without providing figures. Existing customers continued to visit more frequently, marking the 15th consecutive month of increased trip frequency within that group, which rose 1%.
The retailer also noted “meaningful growth in brand search interest, site traffic and site demand” over the period.
“During second quarter of Fiscal 2025, J.C.Penney remained focused on serving as the shopping destination for America’s diverse, working families,” the company said in its statement.
“The second quarter continued to build on the momentum generated by the disruptive marketing that began at the end of April.”
That marketing push has centred on “surprising fashion and other finds” at the retailer. The best-performing categories in Q2 included beauty, fine jewellery and home. Among its private labels, Xersion, Modern Bride, Arizona and Liz Claiborne led performance, while national brands such as Clarks, Skechers and Adidas also saw strong sales.
Since January, J.C. Penney has been operating under Catalyst Brands, the retail group that also manages Aéropostale, Brooks Brothers, Eddie Bauer, Lucky Brand and Nautica.
The company said integration efforts are expected to deliver “significant levels of synergies that will be realized by JCPenney by the year 2027,” particularly across sourcing, distribution, technology, and certain administrative areas.
Penney’s cost of goods sold fell 2.4% during the quarter, supported by improved markdown management that “allowed the Company to manage the impact of distribution and tariff cost increases,” according to its filing.
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