J.C. Penney posts huge Q3 loss
Dallas -- J.C. Penney Co. Inc. on Friday reported a 26.1% decline in third-quarter same-store sales, more than the 17.9% that Wall Street analysts were expecting.
Overall sales fell 26.6% to $2.93 billion. Internet sales fell 37.3% to $214 million.
The company said that its net loss narrowed to $123 million in the third quarter ended Oct. 27, from $143 million a year earlier. The loss was wider than analysts had expected.
J.C. Penney CEO told investors on Friday said the he remained “100% committed” to his transformation plan for the chain, which includes eliminating most coupons and sales events and converting the space its 1,100 stores into a series of branded in-store shops. In a statement, Johnson described Penney as a “tale of two companies,” with the old J.C. Penney still struggling and the new stores surpassing his expectations.
Industry experts say there have been signs that the first few branded shops, which include Levi’s and Liz Claiborne, are more productive than the traditional areas. The chain’s CFO told investors that the branded shops have sales per square foot of $269 versus $134 in the existing areas of the store.
Veteran retail analyst Walter Loeb, president of retail management consultant Loeb Associates, expressed concern about J.C. Penney would fare during the upcoming holiday season in a Reuters report.
“I expect a big drop in sales,” Loeb said. “[Johnson] must generate traffic. I think he has to be more promotional.”
In January, Johnson warned that his transformation of the chain would take four years. He has repeated continually since then the change is a “marathon” and not a sprint.