J.C. Penney posts third-quarter loss but beats sales expectations
J.C. Penney's (JCP) third quarter earnings report Friday disappointed investors despite beating expectations for sales growth.
Penney's stock tanked more than 16% in afternoon trading at the end of a tumultuous week for major retailers.
Nordstrom and Macy's both reported third-quarter results that missed expectations earlier this week due to slower-than-expected sales. Macy's CEO Terry Lundgren said that apparel and accessories spending dragged during the quarter while Nordstrom also saw spending slow across multiple categories.
Still, Penney posted stronger results than some of its retail counterparts, said Hakon Helgesen, an analyst with retail research firm Conlumino, who added in a note that Penney is "currently in rebuilding mode," and that "while JCP remains loss making, the scale of that loss is much less severe than it used to be."
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Penney has been working on a turnaround since former CEO Ron Johnson's plan to remake the retailer failed to resonate with customers. He was fired in April 2013 and ultimately replaced with current CEO Marvin Ellison. The retailer has been making sure items are in stock, brought back core customers and seen traffic improve, said Bob Drbul, equity analyst with financial firm Nomura, in a research note Friday. Still, he said that "there is much work to be done before profitability returns."
Penney reported revenue of $2.90 billion, up from $2.76 billion in the year-ago quarter, above expectations of $2.86 billion. Sales at stores open at least a year increased 6.4%, with particular success in sales of men's, home, footwear, handbags and the company's in-store Sephora outposts.
Penney posted a loss of $137 million, or 45 cents a share. Adjusted for one time gains and losses, the loss was 47 cents a share. Analysts expected a bigger loss of 58 cents a share.
Walmart ditching doorbusters, starting store deals at 6 p.m. Thanksgiving
J.C. Penney said earlier this week that its stores will open at 3 p.m. on Thanksgiving, two hours earlier than last year and one of the earlier start times for the holiday shopping weekend. Many major retailers are opening at 5 p.m. or 6 p.m.
Penney's third quarter results come two days after the company settled a class-action lawsuit that accused the retailer of advertising fake markdowns.