J.C. Penney Reports Surprising Sales Decline
November 11 2016 - 10:10AM
Dow Jones News
J.C. Penney Co. posted a surprising decline in sales, citing
softness in apparel, and lowered a key sales metric.
Penney shares, which rose 5.4% on Thursday following encouraging
quarterly results from other department-store operators, fell 9% to
$8 in premarket trading.
The company's same-store sales fell 0.8% in the quarter, down
from 6.4% growth last year and well below the 2.2% increase
analysts polled by Thomson Reuters were expecting. Penney now
expects the metric to grow 1% to 2% for the year, down from 3% to
4% previously.
Chief Executive Marvin Ellison cited softness in apparel sales
but said overall sales accelerated in the final two weeks of
October.
In recent quarters, Penney has outlined strategic changes to
meet changing consumer habits. Shoppers increasingly have turned to
discount chains and online operators such as Amazon.com Inc. for
their clothing and apparel needs.
The company has expanded its same-day, in-store pickup for
online buyers throughout the chain and moved into items that are
more difficult to buy online, such as appliances. The retailer has
rolled out appliances to more than 500 stores after a
more-than-30-year absence. In the quarter, Penney said appliances
helped to increase same-store sales by 0.2%.
In all for the quarter, Penney posted a loss of $67 million, or
22 cents a share, compared with a loss of $115 million, or 38 cents
a share, a year prior. On an adjusted basis, which excludes
restructuring and debt extinguishment costs, the loss was 21 cents
a share.
Revenue fell 1.4% to $2.86 billion.
Analysts polled by Thomson Reuters had expected an adjusted loss
of 21 cents a share on revenue of $2.95 billion.
Gross margin was 37.2%, compared with 37.3% a year prior.
In the recently completed quarter, Penney said that Sephora,
home, salon and fine jewelry were among its top-performing
divisions and that the Pacific and Northwest were the
best-performing regions geographically.
This week, Macy's Inc. and Kohl's Corp. cited improving sales
trends and gave upbeat outlooks for the key holiday season, despite
posting another quarter of declining sales, as the chains struggle
with changing shopping habits and competition from discounters.
Nordstrom Inc., meanwhile, reported a sales increase and lifted its
financial targets for the year.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
November 11, 2016 09:55 ET (14:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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