J.C. Penney loses $163 million in Q1; same-store sales slide 18.9%
Dallas — J.C. Penney Co. on Tuesday reported a wider-than-expected loss of $163 million, or 75 cents a share, for its fiscal quarter ended April 28, 2012, compared with a year-earlier profit of $64 million.
Excluding markdowns to reduce inventory levels, restructuring costs and pension-plan expenses, the loss was $55 million or $0.25 per share, compared with a year-earlier profit of 36 cents.
Same-store sales declined 18.9% in the quarter. Total sales dropped 20.1% to $3.15 billion, which J.C. Penney said included the effects of exiting its outlet business. Internet sales through Jcp.com were $271 million in the first quarter, plunging 27.9% from last year.
The company said that while sales were slower than expected, its transformation was ahead of schedule.
“Sales and profitability have been tougher than anticipated during the first 13 weeks, but the transformation is ahead of schedule,” said Ron Johnson, CEO of J.C. Penney. “While we have work to do to educate the customer on our pricing strategy and to drive more traffic to our stores, we are confident in our vision to become America’s favorite store. We fully expect that the bold and strategic changes we are making to our operations will result in improved profitability and sustainable growth over the long term.”
J.C. Penney is in the midst of a major transformation, which includes a new everyday low pricing strategy that was launched on February 1, 2012. The strategy replaced Penney’s previous heavy reliance on promotions and discounting.
Gross margin narrowed to 37.6% from 40.5% due to lower-than-expected sales and the impact of deeper seasonal markdowns to clear inventory.
JCPenney stands behind strategy as comps, earnings slip in Q1
PLANO, Texas — From personnel changes to its new "fair and square" price strategy, JCPenney has put a lot into changing the company’s image, and investors are waiting for it to pay off. For the first quarter, the company reported an adjusted net loss of $55 million or 25 cents per share, excluding markdowns taken as a result of the company’s continuing efforts to reduce inventory levels to align with its new strategy, restructuring and management transition charges and non-cash qualified pension expense. On a GAAP basis, the company reported a net loss of $163 million or 75 cents per share. A reconciliation of non-GAAP adjusted net loss to the most directly comparable GAAP financial measure is included with this release.
Comparable-store sales for the first quarter declined 18.9%. Total sales decreased 20.1%, which includes the effects of the company’s exit from its outlet business. Internet sales through jcp.com were $271 million in the first quarter, decreasing 27.9% from last year.
"Sales and profitability have been tougher than anticipated during the first 13 weeks, but the transformation is ahead of schedule. Customers love the new JCP they discover in our stores. Our shop strategy has been applauded by vendor and design partners, our merchants have stepped up to the challenge of improving our merchandise and presentation, we have dramatically simplified our business model and reorganized our teams at headquarters and in our stores. While we have work to do to educate the customer on our pricing strategy and to drive more traffic to our stores, we are confident in our vision to become America’s favorite store. We fully expect that the bold and strategic changes we are making to our operations will result in improved profitability and sustainable growth over the long term," said Ron Johnson, CEO of JCPenney.
In light of charges related to simplifying its operations and adjusting its merchandise assortment, JCPenney said it no longer expects to meet its annual GAAP earnings guidance of $1.59 per share, but affirms its non-GAAP earnings guidance of $2.16 per share which excludes non-cash qualified pension expense, restructuring charges and markdown reserves as we transition our merchandise assortment.
Additionally, the company announced today that it will discontinue the 20 cents per share quarterly dividend. On an annual basis, this will result in cash savings of approximately $175 million, which will be used to help fund the broad-based transformation plan that jcpenney announced in January.
Sears Outlet offers discount to uniformed service members on Armed Forces Day
HOFFMAN ESTATES, Ill. — Sears Outlet stores will offer all past and present, uniformed service members 10% off anything in store on Armed Forces Day, May 19. All Active Duty, Reservist, National Guard, retirees and dependents from the Armed Forces (Army, Navy, Air Force, Marines, Coast Guard), Uniformed Law Enforcement and Fire/Rescue Personnel, are encouraged to visit one of the 120 Sears Outlet stores throughout the United States to redeem this exclusive offer.
"Often uniformed service members are the unsung heroes within our communities," said JJ Ethridge, VP and general manager, Sears Outlet. "At Sears Outlet, we not only honor their commitment to community and country, but also take great pride in demonstrating our continued gratitude for the service and sacrifice they and their families make, home and abroad, each day."