JCPenney Plans New Stores, More Sephora Counters

Having posted first quarter results that beat analysts’ estimates, JCPenney confirmed plans for 17 new stores and a stepped-up growth pace for Sephora locations within its department stores. Sephora has generated “encouraging” numbers for existing stores, Myron E. Ullman, JCPenney’s chairman and ceo, said during a conference call earlier this week. The goal is to add Sephora counters to 50 more JCPenney stores by the close of 2009, bringing the total to 155.

Better than expected sales, cost controls and “better alignment of inventory to sales trends” were enough to lift JCPenney’s gross margin rate 50 basis points and deliver earnings per share (EPS) of $0.11 cents for the first quarter ending May 2. Second quarter guidance still has a recessionary bent. Total sales are forecast to decrease 7 to 10 percent while comparable store sales slip 9 to 12 percent. Gross margin rates could be the good news, even if they can match management’s expectation of modest improvement over the second quarter of 2008.

“Looking to the balance of the year, we expect consumer spending and mall traffic to remain weak, which will be particularly evident against touch comparisons in the second quarter,” Ullman said in the first quarter report.