J.C. Penney Joins Fellow Department Stores in Retail MalaiseBy
Same-store sales sank 3.5% a steeper decline than estimated
Results follow disappointing reports from Macy’s and Kohl’s
Welcome to the club, J.C. Penney Co.
The company joined department-store rivals such as Macy’s Inc. and Kohl’s Corp. in reporting disappointing sales for the first quarter, sending its shares down as much as 11 percent Friday.
The results confirm that weak sales were a universal phenomenon for U.S. department stores last quarter, even among upscale players like Nordstrom Inc. J.C. Penney Chief Executive Officer Marvin Ellison has been trying to set the retailer apart from peers by expanding the company’s partnership with Sephora and increasing its assortment of high-price items, like appliances. The retailer is also focusing on services like salons that require shoppers to come into stores, but progress has been slow.
The company said same-store sales slid 3.5 percent in the period ended April 29. Analysts had estimated an 0.7 percent drop, according to Consensus Metrix.
Ellison blamed that result on a particularly slow February. Comparable sales for March and April improved 600 basis points from February, he said on a conference call.
“My optimism on the future of J.C. Penney is in large part due to the fact that we’re still playing catch-up to many of our competitors,” Ellison said. “We know the upside for profit and revenue exist. We simply have to move faster.”
Shares of J.C. Penney fell as low as $4.73 in New York trading in their biggest intraday decline in 1 1/2 years. The stock had already dropped 36 percent this year through Thursday’s close. Kohl’s slid as much as 4.2 percent Friday, while Macy’s was down as much as 2.5 percent.
Revenue of $2.71 billion missed the average $2.77 billion projection of analysts. The company did report a surprise profit of 6 cents a share, excluding some items. Analysts had estimated a loss of 21 cents.
J.C. Penney maintained its forecast for same-store sales this year, predicting a range from a 1 percent decline to a 1 percent gain. It also reiterated that earnings excluding some items will be 40 cents to 65 cents a share. Analysts estimated 46 cents.
The company also is closing about 140 stores. But it delayed their shutdown by about a month after sales picked up in some locations. (The company said shoppers may have been drawn to the doomed stores by nostalgia.) The locations will be shuttered on July 31, compared with an earlier goal of mid-June, spokeswoman Daphne Avila said last month.
J.C. Penney announced the plans to scale back its store fleet in February, echoing similar intentions by Macy’s and Sears Holdings Corp. The retailer said at the time it would take a charge of about $225 million related to the moves in the first half of this year. The cutbacks, which also include shutting two distribution centers, are meant to save about $200 million a year.
— With assistance by Carlos Torres
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