JC Penney results extend a gloomy week for retailers

NEW YORK (AP) — Sales at established JC Penney stores faded again during its most recent quarter, capping a gloomy week for US retailers.

Penney’s stock sunk below $4 Friday morning, an all-time low for the 115-year-old retailer.

Another quarter of falling same-store sales from JC Penney Co come a day after similar reports from Macy’s, Kohl’s and Dillard’s, as people increasingly avoid malls and shop online or at discount retailers.

Nordstrom stood alone, reporting that its same-store sales rose in the most recent quarter, when it held its annual anniversary sale.

At established Penney stores, sales fell 1.3 per cent during the second quarter.

A JC Penney department store in Hialeah, Fla. - AP
A JC Penney department store in Hialeah, Fla. – AP

It was the fourth straight quarter of declines for Penney, and it was worse than the 1.2 per cent drop that Wall Street analysts expected, according to FactSet.

Penney said its results were hurt by the closing of about 130 stores during the quarter.

“We’ve never liquidated this many stores at one time,” said CEO Marvin Ellison, during a conference call Friday.

Penney, which has about 875 stores left, is making a number of moves to try and reverse its fortunes. The company, which started to sell appliances again last year, said it signed a new deal to sell Electrolux and Frigidaire products.

Ellison said he wasn’t concerned about Amazon’s plans to sell Kenmore appliances on its site, a deal Sears Holdings Corp announced last month.

He said Penney customers want to “physically touch” appliances before making the pricey purchases.

On Thursday, Macy’s CEO Jeff Gennette had left open the possibility of expanding into appliances and other categories to be more of a one-stop shop.

Ellison said back-to-school sales were off to a “good start”, echoing similar comments from executives at Macy’s and Kohl’s on Thursday.

To get shoppers to spend more, Penney added toy sections in more stores in time for the back-to-school season after testing them last year.

And the company hopes more young shoppers will visit the Sephora makeup shops inside Penney’s 600 locations, one of the chain’s biggest draws, when a new beauty line from singer Rihanna is launched.

“Rihanna has one of the largest social media followings of any celebrity,” Ellison said.

Analysts at Jeffries said in a note Friday that they see “some traction” in Penney’s turnaround plan, but said they “remain cautious given a challenged (department) store environment”.

Overall, the company reported a net loss of $62 million, or 20 cents per share, in the three months ending July 29.

In the same period a year ago, it reported a loss of $56 million, or 18 cents per share.

Losses, adjusted for one-time gains and costs, came to nine cents per share, falling short of the six cents per share loss that analysts expected, according to Zacks Investment Research.

Revenue rose 1.5 per cent of $2.96 billion, which beat forecasts of $2.87 billion.