J.C. Penney Co. Inc. (JCP) Thursday reported a first-quarter loss that widened from a year ago, hurt by a 16 percent drop in sales, as well on lower margins. Results came in below Wall Street estimates.
Myron Ullman, III, who recently took over as CEO of the struggling department chain, said he has taken critical steps over the past weeks to bring a semblance of stability to the company.
Steps to entice customers include new attractions and long-beloved brands, as well as focus on pricing and promotional strategies, including the return of coupons, once a bulwark for the company and which ousted CEO Ron Johnson failed to entrench.
The Plano, Texas-based company posted quarterly sales of $2.64 billion, down 16.4 percent from $3.15 billion last year. On average, 19 analysts polled by Thomson Reuters expected sales of $2.70 billion.
On a same-store basis, sales fell 16.6 percent, hurt by the ongoing transformation of the home department.
J.C. Penney recently warned its first-quarter sales would be hurt by construction activities as it transforms the home departments in 505 stores, as well as prior pricing and marketing strategies.
Gross margin for the quarter shrunk to 30.8 percent from 37.6 percent last year, on lower than expected sales, a higher level of clearance sales, and promotional activities.
Operating margin was a negative 18.5 percent, compared with a negative 7.2 percent in the prior year.
During the quarter, the company incurred pension-related costs of $34 million, and restructuring and other charges of $72 million.
J.C. Penney reported a net loss of $348 million or $1.58 per share for the quarter, compared with a net loss of $163 million or $0.75 per share last year.
Excluding items, adjusted loss for the quarter was $289 million or $1.31 per share, compared with an adjusted loss of $55 million or $0.25 per share a year ago. Analysts, on consensus, estimated a loss of $0.86 per share for the quarter. Analysts' estimates typically exclude special items.
J.C. Penney, which has been the bane of investors, is pinning hopes on Myron Ullman who earlier led the company for seven years until November 2011.
Ron Johnson, who led Apple Inc.'s (AAPL) successful retail network, had to make way for Ullman after he failed to revive J.C. Penney's fortunes and was flayed for his ideas to eliminate traditional coupons and other promotional events.
J.C. Penney in early April drew $850 million out of its committed revolving credit facility of $1.85 billion to fund ongoing spending. The company earlier reported working with financial advisors to explore additional capital raising alternatives and develop a strategic financial plan.
Those betting on the company include billionaire investor George Soros, who acquired an additional 7.9 percent stake in the department store chain, bringing his total stake to 17.4 million J. C. Penney shares.
J.C. Penney's stock closed Thursday's regular trade at $18.79, down 0.95%, on a volume of 16.4 million shares on the NYSE. In after hours, the stock fell $0.49 or 2.61%. In the past year, the stock trended in a range of $13.55 - $32.55.
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