The key to JCPenney’s survival: undoing everything Ron Johnson did before being ousted.
The flailing department-store chain reported its first monthly comparable-sales gain in nearly two years — and cited the return of a slew of strategies that had been scrapped by former CEO Johnson.
Penney was able to eke out a 0.9-percent gain in October — its first positive month since December 2011 when Johnson, a former Apple exec, began a disastrous bid to remake the retailer into a trendy haven for younger shoppers.
“We are proud of our October sales improvement, which we achieved despite the federal government shutdown and a challenging consumer environment,” CEO Mike Ullman said.
Penney shares, which sank to an all-time low of $6.42 on Oct. 21, jumped 5.6 percent Thursday to close at $8.13, capping a three-week rally as optimism on Wall Street resurfaces.
Ullman, who returned to the helm of the troubled retailer in April after being ousted in favor of Johnson a year and a half earlier, said sales and margins are up as the company restores coupons and sales events that had been banned by Johnson.
Penney likewise said business is getting a boost as it rebuilds the inventory that Johnson had slashed.
St. John’s Bay, a private brand that Johnson had eliminated altogether from the stores, has helped fuel the recovery with its reintroduction.
Despite the upbeat milestone, many analysts remain cautious about Penney’s prospects, noting that dramatic margin improvements will be needed in the crucial fourth quarter to reverse heavy losses.
Penney addressed analysts’ key concerns on Thursday. It noted its home department showed the biggest comparable-sales gains as it ditched Johnson’s flopped home makeover, which had been tied to a licensing deal with Martha Stewart that spurred an epic courtroom battle with Macy’s that was partially settled last month.