J.C. Penney Reports Surprising Sales Decline

J.C. Penney Co. posted a surprising decline in sales, citing softness in apparel, and lowered a key sales metric.

Penney shares, which rose 5.4% on Thursday following encouraging quarterly results from other department-store operators, fell 9% to $8 in premarket trading.

The company's same-store sales fell 0.8% in the quarter, down from 6.4% growth last year and well below the 2.2% increase analysts polled by Thomson Reuters were expecting. Penney now expects the metric to grow 1% to 2% for the year, down from 3% to 4% previously.

Chief Executive Marvin Ellison cited softness in apparel sales but said overall sales accelerated in the final two weeks of October.

In recent quarters, Penney has outlined strategic changes to meet changing consumer habits. Shoppers increasingly have turned to discount chains and online operators such as Amazon.com Inc. for their clothing and apparel needs.

The company has expanded its same-day, in-store pickup for online buyers throughout the chain and moved into items that are more difficult to buy online, such as appliances. The retailer has rolled out appliances to more than 500 stores after a more-than-30-year absence. In the quarter, Penney said appliances helped to increase same-store sales by 0.2%.

In all for the quarter, Penney posted a loss of $67 million, or 22 cents a share, compared with a loss of $115 million, or 38 cents a share, a year prior. On an adjusted basis, which excludes restructuring and debt extinguishment costs, the loss was 21 cents a share.

Revenue fell 1.4% to $2.86 billion.

Analysts polled by Thomson Reuters had expected an adjusted loss of 21 cents a share on revenue of $2.95 billion.

Gross margin was 37.2%, compared with 37.3% a year prior.

In the recently completed quarter, Penney said that Sephora, home, salon and fine jewelry were among its top-performing divisions and that the Pacific and Northwest were the best-performing regions geographically.

This week, Macy's Inc. and Kohl's Corp. cited improving sales trends and gave upbeat outlooks for the key holiday season, despite posting another quarter of declining sales, as the chains struggle with changing shopping habits and competition from discounters. Nordstrom Inc., meanwhile, reported a sales increase and lifted its financial targets for the year.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

November 11, 2016 09:55 ET (14:55 GMT)

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