J.C. Penney sales fall 8% in Q2, losing share despite marketplace launch
Furniture sales jumped 41% and beauty rebounded from the Sephora split, but the department store still lost ground to Macy's, Dillard's and Kohl's.
J.C. Penney's total net sales fell more than 8% in the second quarter, extending a decline that has now pulled first-half 2026 sales down 6.5% year over year. The retailer launched an e-commerce marketplace late in the quarter, which it said is already outperforming expectations, but the core business kept shrinking.
The quarter was rougher for J.C. Penney than for its department store peers, and GlobalData managing director Neil Saunders said the market for department stores actually grew during the period, meaning Penney's decline represents a genuine loss of market share rather than a broader industry pullback.
He called the sales drop "not particularly convincing," adding it puts J.C. Penney towards the bottom of the retail league table.
Dillard's and Macy's both posted small top-line gains in the same period, and Kohl's sales declined less than 1%, leaving Penney at the bottom of that group's results. Saunders pointed to "noticeable improvement in stores" and "creative marketing" that nonetheless failed to translate into a broader recovery in momentum.
Where the sales actually went
Penney itself blamed lower unit inventory, in-stock gaps and softer demand in seasonal categories for the drag on apparel sales specifically. But several categories moved the other way sharply, and the retailer highlighted them as evidence its turnaround plan is producing at least partial results.
Furniture sales grew 41% year over year, the single largest gain in the quarter, while jewellery rose 9% and salon sales climbed about 7%, helped by both retail product sales and in-store services. Active apparel sales rose roughly 12%, driven by Nike, team sports merchandise and select Adidas footwear.
GlobalData credited effective merchandising tied to the men's World Cup for part of that activewear gain. Beauty sales also improved, lifted by skin care and new colour cosmetics launches including Milani and a run of Korean beauty brands, according to the company.
That beauty rebound is notable because it comes nearly four years after Sephora ended its shop-in-shop partnership with J.C. Penney and moved those concessions into Kohl's stores instead. Saunders said the retailer "has been quite thoughtful about creating a modern proposition that replaces Sephora," a striking reversal given the shops have reportedly dragged on Kohl's own recent sales.
Saunders was less convinced about the wider business, warning that a department store needs almost all of its departments performing at once. "JCP doesn't fire on all of these cylinders, so it remains under pressure," he said, despite the gains in furniture, jewellery, salon and beauty.
He also flagged a structural constraint that limits how far the retailer can cut its way to health: unlike a typical struggling chain, J.C. Penney cannot simply close its weakest stores, because two of its landlords are also among its owners, according to Saunders.
The new J.C. Penney Marketplace, launched late in the second quarter, is the retailer's clearest bet on future growth. The company expects it to contribute incremental gains to e-commerce sales over the long term, though it has not disclosed sales figures for the platform itself.
For the holiday season, J.C. Penney said it will continue its "value focused pricing activities" and centre holiday presentations on "clear value and family moments." It also said it would keep monitoring the consumer environment and customer response, making "strategic adjustments as necessary."
J.C. Penney's position is cushioned by Catalyst Brands, the group that provides it with financial and operational backing and which Saunders described as focused on the retailer's longer-term prospects rather than quarterly swings. That backing, he said, means the chain is not going anywhere soon.
"JCP remains financially stable and with the backing of Catalyst and investors it's really not going anywhere," Saunders said. He drew a direct contrast with Sears, saying Penney "is not being run into the ground" in the same way, pointing instead to continued investment and effort to rebuild the business.
The broader picture for department stores has been mixed this year. Bloomingdale's posted record second-quarter sales volume as Macy's Inc. took share from Saks, while other retail names including Bath & Body Works have cut guidance as sales slides continue and Lululemon has pulled back store expansion after a sharp leggings sales fall.
Set against that landscape, J.C. Penney's results show a retailer improving in specific categories, furniture, jewellery, beauty and activewear among them, while its overall top line keeps sliding and its market share keeps shrinking relative to a growing category.
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Image: J.C. Penney