Shares of J.C. Penney Company, Inc. (OTC:JCPN.Q) tumbled Friday after the department store chain posted an underwhelming second-quarter earnings report.
Comparable sales fell again, dropping 1.3%, and the company saw gross margin compress 200 basis points as it liquidated 127 stores. It also reported a wider loss than expected with an adjusted loss per share of $0.09, compared to expectations at a loss of $0.05 and down from a loss of $0.05 a year ago.
The stock had given up 17.2% at 1:04 p.m. EDT.
Investors seemed to already be expecting a downbeat result from J.C. Penney as the stock sunk 8% Thursday to go along with disappointing results from peers Macy's and Kohl's.
Revenue in the period increased 1.5% to $2.96 billion, assisted by liquidation sales, which beat estimates at $2.87 billion, but investors seem to be losing patience with the supposed turnaround.
CEO Marvin Ellison reminded investors that the effects of the liquidation would be contained in the second quarter, and said the company remains "confident in our ability to further strengthen our balance sheet, while driving sustainable growth and long-term profitability for JCPenney."
Ellison said the company was in good shape for the back-to-school season with kids apparel sales improving, and he promised "improved results in the back half of the year."
J.C. Penney maintained its full-year guidance of comparable sales around flat and adjusted earnings per share of $0.40 to $0.65, however, investors seem to be losing faith in its ability to hit those targets. The company has taken a number of steps to grow the business such as adding appliances, expanding Sephora, and releasing new fashion labels, but comparable sales continue to decline. The window for J.C. Penney to build a sustainable business seems to be closing.