J.C. Penney misses sales mark and expects full-year decline, shares dip

J.C. Penney expects its struggles to continue through the holiday season as the department store chain forecast store sales declines for the full-year.

Total sales fell 5.8 percent during the three-month period that ended Nov. 3, as the retailer marked down merchandise to clear out excess inventory, the company said Thursday. Sales of $2.65 billion during the third quarter, compared to $2.8 billion a year ago, fell short of the $2.8 billion expected by analysts polled by S&P Global Market Intelligence.

J.C. Penney saw its net loss grow to $150 million, compared to a net loss of $128 million in the same period a year ago. Analysts had expected a net loss of $178 million.

During the quarter, the retailer’s top performing divisions were jewelry, women’s apparel and men’s apparel. The company “made solid progress” toward the “right-sizing of our inventory,” said chief executive officer Jill Soltau, who joined the company in October. 
after Marvin Ellison departed to become the new CEO of Lowe’s.

That move “allows our great store associates to better focus on providing the excellent customer service J.C. Penney has traditionally been known for,” Soltau said on a conference call Thursday with investment analysts.

The goal is “to put J.C. Penney back on a path to profitable growth,” she said. “In the coming weeks and months, I will continue to meet with and learn from our teams throughout the entire organization – talking with them about what we’re doing that’s working well and, most importantly, what we can do to address our opportunities.,” she said.

In addition to better managing merchandise inventory, J.C. Penney will continue to assess its number of stores for possible closings to cut costs, she said. The retailer, which currently has more than 860 stores, has closed about 20 percent of its stores in recent years and 140 within the last year.

Sales at stores open at least a year declined 4.5 percent during the quarter. For the full fiscal year, J.C. Penney expects comparable store sales to be down low-single digits.

J.C. Penney (JCP) shares were down 2 percent in early trading Thursday to $1.20 after falling 12 percent in premarket trading.

Soltau faces “a monumental task,” said Neil Saunders, managing director of GlobalData Retail. “This isn’t so much as running up a down escalator, it’s more akin to running up a super-speed down escalator with slippery oil poured all over it,” he said in a note to investors.
 
For the retailer to suffer a sales decline “at a time when consumer confidence and spending are at their peak is nothing short of atrocious,” he said.

J.C. Penney must continue to pare its non-profitable stores in a strategy similar to that taken by Macy’s, Saunders said.

Part of Soltau’s mission is to define J.C. Penney’s marketing message. “We need to understand where we can sit within this retail landscape,” Soltau said. “I know we have a place.”

Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.

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