JC Penney Withdraws Profit Guidance, Cuts Sales Outlook
PLANO, Texas (AP) — Shares of J.C. Penney plunged before the opening bell after the company withdrew profit guidance and lowered its sales expectations for the year.
Sales at stores open at least a year, a key gauge of a retailer's health, declined 5.4 percent. Analysts were calling for a 0.5 percent decline, according to FactSet.
The numbers were bad even in the context of a company long up against the ropes.
"To deliver a comparable sales decline of 5.4 percent is poor," wrote Neil Saunders, managing director of GlobalData Retail. "To do it at a time when consumer confidence and spending are at their peak is nothing short of atrocious."
The department store said Thursday that it now foresees sales at stores open at least a year to be down low-single digits for fiscal 2018. Analysts polled by FactSet had been expecting a 0.2 percent drop.
J.C. Penney said that it withdrew the profit outlook because its new CEO and interim CFO need more time to look over operations. Last month the company named former Jo-Ann's Stores CEO Jill Soltau to its top post. Soltau succeeded Marvin Ellison, who left this past summer to take the top job at home improvement chain Lowe's after less than four years at Penney's helm. Also in October, Penney appointed Michael Fung as interim CFO. Fung succeeded Jerry Murray, who resumed his responsibilities as senior vice president of finance.
The department store has been trying to turn things around, bringing back big appliances like washing machines, adding year-round toy shops and improving its e-commerce operations. That has yet to show a substantial effect.
"The first and most pressing task for Jill Soltau is to get JC Penney back to thinking in a customer-centric way, Saunders said. "For far too long the company has undertaken random initiatives with seemingly no consideration of who the core customer is or what they want. With an incredibly tight balance sheet, JCP can no longer afford to squander resources."
For the fiscal third quarter ended Nov. 3, the Plano, Texas, company posted a loss of $151 million, or 48 cents per share. A year earlier it lost $125 million, or 40 cents per share.
Losses, adjusted for one-time gains and costs, were 52 cents per share, which is a nickel better than analysts had expected, according to a survey by Zacks Investment Research.
Revenue of $2.73 billion fell short of Wall Street expectations of $2.81 billion.
Shares of J.C. Penney Co. tumbled close to 14 percent before the opening bell, to $1.07.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on JCP at https://www.zacks.com/ap/JCP