Penney posts bigger-than-expected loss, cuts outlook
PLANO, Texas (AP) — J.C. Penney 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 J.C. Penney 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, Penney 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.com expands further into fashion and off-price chains like T.J. Maxx add more stores.