J.C. Penney Co. (JCP) swung to a loss in its fiscal fourth quarter, as the retailer shouldered heavy costs tied to its revamped pricing strategy.

Led by new Chief Executive Ron Johnson, a former Apple Inc. (AAPL) executive, the department store operator this month launched a new pricing approach that aims to cut through the clutter of department store promotions.

In the first indication of how things are going, Johnson said on a prerecorded call Friday that February sales are trending below last year. Johnson said he was confident the company's "simplified business model" will more than offset the shortfall, so the company can meet its earnings guidance. Johnson also said customers are responding favorably to the new pricing structure.

J.C. Penney's strategy calls for month-long promotions instead of random sales and prices meant to appeal to shoppers off the bat.

The approach "will dramatically simplify operations, significantly lower the company's cost structure and create a platform for growth that will result in improved profitability in 2012 and beyond," Johnson said.

For the quarter ended Jan. 28, J.C. Penney reported a loss of $87 million, or 41 cents a share, compared with a year-earlier profit of $271 million, or $1.13 a share. The latest period included restructuring and management transition charges that affected results by 56 cents a share as well as a 59-cent per-share impact from the company's new pricing and promotional strategy.

J.C. Penney last month lowered its target to earnings of 65 cents to 70 cents a share after reporting lackluster sales for the critical holiday selling season.

Total sales declined 4.9% to $5.43 billion, coming in shy of the $5.5 billion expected by analysts. Same-store sales were down 1.8%.

Gross margin narrowed sharply to 30.2% from 37.6% on lower-than-expected sales and increased markdowns.

J.C. Penney has been in heated competition with rivals like Macy's Inc. (M) and Kohl's Corp. (KSS). The retailer has shown it is not afraid to take on its competition. J.C. Penney recently announced it is adding products from Martha Stewart Living Omnimedia (MSO) to its roster, a move that spawned a lawsuit from Macy's, which said it has exclusive rights to the merchandise.

Macy's started off the fourth-quarter reporting season for major retailers Tuesday, posting a 12% rise in earnings thanks to strong sales during the holidays.

Kohl's, however, saw its earnings decline 7.9% in the latest quarter as a disappointing holiday performance led to its first revenue decline in roughly three years.

Shares were recently off 1.34% to $41.37. Through the Thursday close, the stock is up 19% since the start of the year, outpacing gains in the broader market.

   -By Karen Talley and Mia Lamar, Dow Jones Newswires; 212-416-3207; mia.lamar@dowjones.com
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