May 8 (Bloomberg) -- J.C. Penney Co., the department-store chain that replaced its chief executive officer last month, said preliminary fiscal first-quarter sales fell 16 percent, a smaller drop than a year earlier.
Sales in the quarter ended May 4 were $2.64 billion, the Plano, Texas-based company said yesterday in a statement. Analysts projected $2.73 billion, the average of 18 estimates compiled by Bloomberg. Sales fell 20 percent in the first quarter last year.
CEO Myron Ullman is working to improve sales after revenue last year tumbled 25 percent to $13 billion amid Ron Johnson’s failed attempt to remake the retailer. The first-quarter sales drop was fueled by “prior pricing and marketing strategies,” and disruption from renovations to more than 500 stores’ home sections, J.C. Penney said. First-quarter same-store sales slid 16 percent after falling 32 percent in the fourth quarter.
“This is the first time the news hasn’t been horrific,” Liz Dunn, an analyst at Macquarie Group in New York, said in an interview. “The numbers aren’t that bad.”
J.C. Penney rose 7.4 percent to $17.61 at the close in New York. The shares have lost 11 percent this year, compared with a 14 percent gain for the Standard & Poor’s 500 Index.
After yesterday’s report, Rick Snyder, an analyst for Maxim Group LLC in New York, raised his recommendation on the shares to hold from sell.
“A return to discounting will drive traffic and conversion,” Snyder said today in a note to clients. While some customers are “likely gone forever,” some will return with more coupons, he said.
Full results for the quarter are scheduled to be released on May 16, J.C. Penney said. The company released these figures as part of a previously announced loan facility. The chain has a loan commitment from Goldman Sachs Group Inc. for $1.75 billion.
The retailer also updated its balance sheet, saying that it had $821 million in cash and $3.82 billion in debt as of May 4. Since returning to J.C. Penney after being replaced by Johnson in November 2011, Ullman has tried to improve the company’s finances by drawing $850 million from its credit line, as well as getting the Goldman loan commitment. The cash and debt it reported included the borrowing from its credit facility and not the loan commitment.
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