Dallas -- J.C. Penney Co. swung to a loss of $87 million in the fourth-quarter, compared with a profit of $271 million in the year-ago period. The chain’s results were dragged down by restructuring and management transition charges, as well as costs tied to its new pricing strategy.
Revenue fell 5% to $5.42 billion, reflecting the company's exit from its catalog business. Analysts expected $5.5 billion. It was the third consecutive quarter of declining revenue. Same-store sales were down 1.8%. Gross margin fell 7.4 percentage points to 30.2%, hurt by heavy markdowns.
"While 2011 was a year of transition at J.C. Penney, 2012 will be a year of transformation," said CEO Ron Johnson. The former Apple stores head became chief executive of J.C. Penney in November.
In January, J.C. Penney announced a three-tier pricing strategy, effective Feb.1, which eliminates short-term discounts and frequent promotions in favor of everyday lower prices (about 40% less than initial prices of a year ago) and clearance events the first and third Friday of each month.
The company also is updating its assortment of brands and the store experience, with a big emphasis on in-store brand shops. The retailer ultimately expects its stores to feature 80 to 100 brand shops
“As we embark on this transformation, the strategic changes we are making to our business model will dramatically simplify J.C. Penney's operations, significantly lower the company's cost structure and create a platform for growth that will result in improved profitability in 2012 and beyond," Johnson said.
For the year, J.C. Penney’s total sales decreased 2.8% to $17.3 billion and online sales were essentially flat at $1.5 billion. The company reported an operating loss for the full year of $2 million, which included $451 million of restructuring and management transition charges.