Have Macy’s, Kohl’s and Nordstrom set the earnings bar too high for JC Penney?

Possibly. After the former three crushed what were admittedly very low earnings expectations yesterday, investors did not take kindly to the latter’s second quarter results – which largely came in line with analysts’ estimates.

Shares in the Texas-based department store operator are falling in pre-market trading, even though the company reported a rise in sales and margins – something which has eluded many of its rivals.

For the quarter to end of July, net sales rose 1.5 per cent to $2.9bn. Within this like-for-like sales – a key industry metric rose 2.2 per cent – as the turnaround that new chief executive Marvin Ellison is trying to engineer continues to take hold.

“We are pleased with the sequential improvement we achieved throughout the second quarter, and our solid performance across all key metrics is encouraging,” he said.

JC Penney, whose origins date back to Missouri at the turn of the twentieth century, has struggled to reinvent itself as a twenty first century retailer as online shopping explodes and US consumers remain a diminished force post the 2009 recession.

However, there are signs that Mr Ellison, who joined the mid-tier retailer last August, is making progress in its multi-year effort to rebuild the company.

Alongside the rise in sales, gross margin also gained 10 basis points to 37.1 per cent during the period, suggesting the company is cutting back on the promotional activities that have hurt the wider retail sector.

Net loss also narrowed to $56m, or 18 cents a share during the quarter, compared to the $117m loss recorded in the prior year period.

Shares in the company, up nearly 50 per cent for the year to date, fell by as much as 1.5 per cent in pre-market trading.

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