J. C. Penney Company, Inc. (NYSE:JCP) Q2 2017 Earnings Conference Call - Final Transcript

Aug 11, 2017 • 08:30 am ET


J. C. Penney Company, Inc. (NYSE:JCP) Q2 2017 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the JCPenney Second Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Trent Kruse. Sir, you may begin.

Trent Kruse

Thank you, Kaley, and good morning, everyone. As a reminder, the presentation this morning includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which reflects the company's current view of future events and financial performance. The words expect, plan, anticipate, believe and similar expressions identify forward-looking statements. Any such forward-looking statements are subject to risks and uncertainties, and the company's future results of operations could differ materially from historical results or current expectations. For more details on these risks, please refer to the company's Form 10-Q and other SEC filings.

Please note that no portion of this presentation may be rebroadcast in any form without the prior written consent of JCPenney. For those listening after August 11, 2017, please note that this presentation will not be updated, and it's possible that the information discussed will no longer be current.

Also, supplemental reference slides are available on our Investor Relations website. While management will not be speaking directly to the slides, these slides are meant to facilitate your review of the company's results and to be used as a reference document following the call.Today, you will hear from Marvin Ellison, Chairman and CEO of JCPenney; as well as Jeff Davis, our CFO, who will provide a few brief remarks about his first couple weeks at JCPenney. I'll then rejoin the call to provide our Q2 financial overview and outlook. Following our prepared remarks, we look forward to taking your questions.

With that, I will now turn the call over to our Chairman and CEO, Marvin Ellison.

Marvin R. Ellison

Hey, thank you, Trent. Good morning, everyone. Overall, we're pleased with our Q2 performance and let me highlight a couple of key wins from the quarter. First, we're pleased we delivered sequential comp sales improvement of 220 basis points from Q1 to Q2, and a total sales growth including our clothing stores was a plus 1.5%.

We managed inventory very effectively, delivering a reduction of 6.8% versus last year. And we're also very encouraged that our new apparel initiatives led to sequential comp improving in all apparel categories in Q2.

Omnichannel was also a big win for us in the second quarter. We rolled out free ship-to-store and online fulfillment from all stores, which contributed to significant growth in the second quarter. And we're pleased with our ongoing efforts to reduce corporate overhead with over 80 basis points improvement in SG&A. And finally, we increased free cash flow by over $230 million versus last year, which is a significant accomplishment for us.

Our comp improvement in Q2 is even more encouraging