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Reuters
Published
Aug 14, 2015
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J.C. Penney's loss narrows on demand for Sephora beauty products

By
Reuters
Published
Aug 14, 2015

J.C. Penney reported a smaller than expected quarterly loss, helped by demand for home goods and high-end Sephora beauty products, indicating that the department store operator's turnaround efforts were starting to pay off.



J.C. Penney has been increasing the number of stores run by popular beauty brand Sephora, owned by luxury giant LVMH, within its stores to attract shoppers.

The stores, opened following pressure from activist investor Bill Ackman during J.C. Penney's ill-fated attempt to go upmarket, accounted for 12% of the company's sales last year, along with women's accessories.

The company had 515 Sephora stores within its stores as of May 3.

J.C. Penney's net loss narrowed to $138 million in the second quarter ended Aug. 1, from $172 million a year earlier. Revenue rose 2.7 percent to $2.88 billion.

Analysts on average had expected revenues of $2.86 billion, according to Thomson Reuters.

Gross margin improved 1% to 37% of sales in the quarter, helped by lower discounting.

J.C. Penney's results contrast those from higher-end department store operators Macy's and Kohl. Both companies reported sales and profit below analysts' estimates this week.

Sales at J.C. Penney stores open more than a year rose 4.1%, above the 3.9% expected by analysts polled by research firm Consensus Metrix.

J.C. Penney's sales have been improving since the company abandoned its attempt to move upmarket in 2013, reintroducing traditional discounts and focusing on a narrower set of products. The company is also aggressively pushing its private brands and collaborating with fashion and beauty experts to revamp salons within its stores.
 

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