JCPenney Cuts Outlook After Losses Bigger Than Expected
PLANO (AP) - JCPenney reported a bigger-than-expected loss in its fiscal second quarter as a key sales metric fell well short of Wall Street's view. The department store operator also cut its full-year forecast again, and its shares plunged more than 22 percent before the market open on Thursday.
The report comes three months after the struggling department store chain saw its CEO Marvin Ellison depart for the top job at Lowe's after less than four years on the job.
Ellison had tried to refocus JCPenney on home appliances and beauty, following a shift by consumers away from spending a lot of money on clothing. He did make some inroads, but the turnaround was far from complete on his departure. And with consumer spending on the rise and other retailers like Walmart doing well, JCPenney has failed to enjoy the benefit.
Chief Financial Officer Jeffrey Davis said in a statement that the chain was dealing with some excess inventory, and had to mark down products and take other actions to try to move items.
Sales at stores open at least a year, a key gauge of a retailer's health, edged up 0.3 percent. Analysts polled by FactSet expected a 1 percent increase.
The company, like many department stores, is trying to cut costs and make the chain better able to reach shoppers jumping back and forth between online and the stores. Department stores, which are heavily dependent on clothing sales, are seeing more competition there as Amazon expands further into fashion and off-price chains like T.J. Maxx add more stores.
For the three months that ended Aug. 4, JCPenney Co. lost $101 million, or 32 cents per share. A year ago the Plano based company lost $48 million, or 15 cents per share. Stripping out an impairment charge and other items, the loss was 38 cents per share. That's much larger than the loss of 8 cents per share that analysts surveyed by Zacks Investment Research expected.
Total revenue declined to $2.83 billion from $3.07 billion, mostly hurt by store closings. Analysts surveyed by Zacks were calling for $2.89 billion in revenue.
Looking ahead, JCPenney now anticipates a loss of 80 cents to $1 per share for fiscal 2018. Its prior outlook was for a loss of 7 cents per share to earnings of 13 cents per share. Before that, it had predicted a potential profit range of 5 cents to 25 cents per share. Analysts were looking for earnings of 4 cents per share, according to FactSet.
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