- Same-store sales in third quarter rise 6.4%, topping estimates
- Net loss narrows as Ellison continues Ullman's cost cuts
J.C. Penney Co., the third-largest U.S. department-store company, fell the most in more than two years after signaling that sales growth during the holiday season may slow from the third quarter’s pace.
Same-store sales this year will rise 4 percent to 5 percent, the Plano, Texas-based company said Friday in a statement, repeating an earlier projection. That comes after the retailer posted third-quarter comparable sales that increased 6.4 percent, beating analysts’ 4.5 percent average estimate and bringing the gain for the first nine months of the year to 4.6 percent.
The forecast signals that Chief Executive Officer Marvin Ellison, who took the helm in August, still has a ways to go in completing the turnaround that started under predecessor Mike Ullman. Ellison, a former executive at Home Depot Inc., is following Ullman’s strategy of cutting costs, investing in e-commerce and building customer loyalty through popular brands such as Sephora.
“Not raising their forecast shows J.C. Penney is being cautious,” said Rick Snyder, an analyst at Odeon Capital Group.
Still, the company’s turnaround plan showed some progress during the quarter. The loss in the period through Oct. 31 was 47 cents a share, excluding some items. That was better than the 56-cent loss analysts projected, on average. The net loss narrowed to $137 million from $188 million a year earlier. Revenue rose 4.8 percent to $2.9 billion, topping analysts’ $2.88 billion average estimate.
J.C. Penney’s third-quarter performance sets it apart from upscale rivals Macy’s Inc. and Nordstrom Inc., which struggled with restrained consumer spending during the period. By contrast, Kohl’s Corp., which shares many of J.C. Penney’s lower- and middle-income shoppers, posted results that topped analysts’ estimates, helped by strong back-to-school sales.
Yet even the bright spots in J.C. Penney’s quarter weren’t enough give its stock a lift. The shares fell $1.35 to $7.44 in New York, the biggest drop since February 2013. The stock has gained 15 percent this year.
“People don’t want to own retail stock right now,” Snyder said. “They’re selling their retail stocks, and J.C. Penney is stuck in the middle of it.”