J.C. Penney’s sales drop as rivals outperform

J.C. Penney recorded an 8% drop in second-quarter sales, totaling $1.3 billion, a performance that highlights its difficulties in a period when competitors such as Dillard’s and Macy’s posted slight increases. This downturn represents the retailer’s weakest results in a market where Kohl’s alone managed to limit its sales decline to under 1%. Over the first half of 2026, Penney’s net sales have fallen by 6.5%, further separating it from rivals in the sector. Penney’s struggles were particularly pronounced compared to peers, as Dillard’s and Macy’s eked out modest top-line gains while Kohl’s sales decline remained minimal.

Clothing sales drove the decline, weighed down by lower unit inventory, in-stock gaps, and softer demand in seasonal categories. However, certain categories outperformed expectations. Activewear saw a 12% increase, fueled by collaborations with Nike and Adidas, while furniture sales surged 41%. Jewelry and salon services also rose, with jewelry up 9% and salon offerings climbing 7%. Beauty products, particularly skin care and new launches from brands like Milani and K-beauty lines, contributed to a broader improvement in that segment, marking a recovery from the loss of its Sephora partnership four years prior. The retailer’s gross margin of 39.2% was impacted by higher product costs, pricing adjustments, category mix shifts, and increased promotions.

Catalyst Brands, the company’s parent organization, continues to provide financial and operational support, helping stabilize Penney’s position. Net income shrank by more than 50% in the quarter, showing the financial pressure despite Catalyst’s backing.