Department store chain J.C. Penney Co. Inc. (JCP), announcing preliminary results for the first quarter, said it expects to see a little more than 16 percent year-over-year decline in sales, which is currently missing analysts' expectations. The company was providing the information in connection with its previously announced proposed senior secured term loan financing transaction.
The Plano, Texas-based company currently expects sales for the first quarter of $2.64 billion, down 16.4 percent from $3.15 billion in the same quarter last year.
On average, seventeen analysts polled by Thomson Reuters currently expect the company to report revenues of $2.74 billion for the quarter. Analysts' estimates typically exclude special items.
Comparable store sales for the quarter is projected to be about 16.6 percent.
The company attributed the projected sales decline partially to construction activities in connection with the transformation of the home departments in 505 stores. The sales results also reflect its prior pricing and marketing strategies, which are being changed under new leadership.
The company is slated to report financial results for the first quarter on May 16, 2013.
J.C. Penney is leaving no stone unturned to revive its flagging fortunes. The company's stock has taken a beating following a slew of unfavorable news including dismal quarterly earnings and executive upheavals.
The company's Chief Executive Officer Ron Johnson was ousted in early April, and his predecessor Myron Ullman III was reappointed to lead the struggling company. Ullman had led J.C. Penney for seven years until November 2011, when Johnson took over.
Johnson, who took over control of J.C. Penney in late 2011, had been criticized for his marketing tactics. He had joined Penney after leading Apple, Inc.'s (AAPL) successful retail network. However, his idea to eliminate the company's traditional coupons and big sales events for everyday low price strategy were disastrous.
The company in early April also drew $850 million out of its committed revolving credit facility of $1.85 billion to fund ongoing spending. The company also said then that it is working with financial advisors to explore additional capital raising alternatives and develop a strategic financial plan going forward.
Over the past few months, J.C. Penney has worked to improve performance through changes in its pricing and promotional strategies, including the return of coupons, and the development of other new initiatives to drive store traffic.
That has seen billionaire investor George Soros acquiring an additional 7.9 percent stake in the department store chain, with Soros owning 17.4 million shares of J. C. Penney.
In late February, the company reported a sharply wider loss for the fourth quarter, as dismal holiday demand pushed down sales at the department store chain by 28 percent. Quarterly sales also dropped amid stiff rivalry from other retail giants, as the company had to contend with lower gross margin and impairment charges. Comparable store sales slid a whopping 31.7 percent.
JCP closed Tuesday's regular trading session at $16.40, down $0.52 or 3.07% on a volume of 11.31 million shares. However, the stock gained $0.27 or 1.65% in after-hours trading.
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