NEW YORK (AP) — J.C. Penney reported a bigger-than-expected loss in its fiscal second quarter as a key sales metric fell well short of Wall Street’s view. The department store operator also cut its full-year forecast again, and its shares plunged 24 percent.
The dismal report, released Thursday, illustrates the challenges awaiting whoever becomes the next CEO, after Marvin Ellison departed for the top job at Lowe’s in May after less than four years on the job. Penney said the board has met with “highly qualified” candidates so far.
Ellison had tried to refocus J.C. Penney on home appliances and beauty, following a shift by consumers away from spending a lot of money on clothing. He did make some inroads, but the turnaround was far from complete on his departure. And with consumer spending on the rise and other retailers like Walmart doing well, Penney has failed to enjoy the benefit.
Chief Financial Officer Jeffrey Davis, one of four top executives sharing responsibility for day-to-day operations until a new CEO is named, said in a statement that the chain was dealing with some excess inventory, and had to mark down products and take other actions to try to move items.
Sales at stores open at least a year, a key gauge of a retailer’s health, edged up 0.3 percent. Analysts polled by FactSet expected a 1 percent increase.
The company, like many department stores, is trying to cut costs and make the chain better able to reach shoppers jumping back and forth between online and the stores. Department stores, which are heavily dependent on clothing sales, are seeing more competition there as Amazon.com expands further into fashion and off-price chains like T.J. Maxx add more stores.
Penney has said it plans to refocus on its women’s business, after failing to bring in younger shoppers. It has also earmarked 300 mall locations where it will aggressively beef up appliances, mattresses, furniture, and workwear like overalls.
J.C. Penney also plans to expand the baby products it sells at stores beyond clothing as the department store joins the many other chains trying to claim some of the Babies R Us sales up for grabs after the liquidation of Toys R Us.
For the three months that ended Aug. 4, J.C. Penney Co. lost $101 million, or 32 cents per share. A year ago the Plano, Texas-based company lost $48 million, or 15 cents per share. Stripping out an impairment charge and other items, the loss was 38 cents per share. That’s much larger than the loss of 8 cents per share that analysts surveyed by Zacks Investment Research expected.
Total revenue declined to $2.83 billion from $3.07 billion, mostly hurt by store closings. Analysts surveyed by Zacks were calling for $2.89 billion in revenue.
J.C. Penney now anticipates a loss of 80 cents to $1 per share for fiscal 2018. Its prior outlook was for a loss of 7 cents per share to earnings of 13 cents per share. Before that, it had predicted a potential profit range of 5 cents to 25 cents per share. Analysts were looking for earnings of 4 cents per share, according to FactSet.
Penney’s shares fell 57 cents to $1.84 on Thursday.