J.C. Penney Same-Store Sales Look Better, but Don’t Be Fooled

In the third quarter of 2012, J.C. Penney’s same-store sales were down 26.1% year-over-year. The forecast from Retail Metrics for the third quarter of this year is that same-store sales will fall another 4.9%. That is an improvement in the rate of decline, of course, but hardly qualifies as a turnaround.

And a turnaround is what the company says is happening. In an announcement Tuesday morning before markets opened, J.C. Penney’s CEO said:

Over the last six months, we have made significant strides and are now seeing positive signs in many important areas of the business, in spite of what continues to be a difficult environment for consumers and retailers in general. While pleased with the improving trends and more predictable performance, we are still in the early stages of the turnaround and will maintain a relentless focus on achieving our long-term goals for the benefit of our customers, associates and shareholders.

The company points to a 25.3% growth in online sales in September as a sign of … something. But most retailers post double-digit gains in online sales because that is where the growth is. If this were different at J.C. Penney, that would be the real surprise.

Margins are still nonexistent due to “the overhang of inventory from the first two quarters of the year, higher levels of clearance units sold during the [third quarter], as well as the company’s transition back to a promotional pricing strategy during the second quarter of 2013.”

Regarding J.C. Penney’s financial status, the company said that it expects to end the year with more than $2 billion in liquidity, following the $785 million stock offering. The balance comes from the company’s unused portion of its credit facility.

For some reason, J.C. Penney stock is up 7% in premarket trading this morning, at $8.25 in a 52-week range of $7.59 to $27.00.