J. C. Penney Company announced financial results for its fiscal first quarter ended April 30, 2016. Comparable sales were (0.4) % for the first quarter.
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Marvin R. Ellison, chief executive officer, said, "The first quarter was clearly challenging from a sales perspective. Although our business was not immune to the issues facing other retailers, I am pleased that we were able to deliver our second consecutive quarter of positive operating profit.
"In addition, the teams did an excellent job of proactively managing the business throughout the quarter to ensure we remained a fiscally disciplined organization. As a result, we exceeded our profitability expectations, achieving a 63 % increase in EBITDA to $176 million for the quarter."
"While our first quarter sales were below our expectations, we are maintaining our annual comp guidance of 3 % to 4 % as a result of the positive nature of our recent sales trends, the strength of our Sephora business and our decision to accelerate our appliance rollout.
"However, we are lowering our full year gross margin guidance to a 10 to 30 basis points increase for the year, reflecting the rollout of appliances and the rapid growth of our online business.
"Having said that, we remain confident that our turnaround remains on track, and we are excited about our 2016 sales drivers including new Sephora locations, Center Core enhancements and our nationwide rollout of major appliances announced earlier this week. Accordingly, we are reaffirming our $1 billion in EBITDA for 2016."
For the quarter, Men's, Sephora and Footwear and Handbags were the Company's top performing divisions. Geographically, the North East and Ohio Valley were the best performing regions of the country.
For the first quarter, gross margin was 36.2 % of sales. Gross margin was impacted by additional markdowns due to unseasonable weather, partially offset by an improvement in our clearance selling margin.
SG&A expenses for the quarter were down $93 million to $872 million, or 31.0 % of sales, representing a 280 basis point improvement from last year. These savings were primarily driven by lower controllable costs and corporate overhead, reduced advertising spend and improved private label credit card income.
EBITDA improved $68 million to $176 million for the quarter, a 63 % improvement from the same period last year.
Adjusted EBITDA improved 80 % to $153 million, a $68 million improvement from the same period last year. For the first quarter, the Company delivered a 55 % improvement in net income over the prior year to a loss of $68 million or $(0.22) per share. ■