Shares of J.C. Penney Company Inc (OTC:JCPN.Q) were diving today after the department store chain reported disappointing first-quarter results. Penney said comparable sales barely increased, and it lowered its profit forecast this year, a further sign that its turnaround efforts have stalled out. As of 11:59 a.m. EDT, the stock was down 10.6%.
Penney said comparable sales increased 0.2% in the quarter as management blamed cooler-than-normal weather across much of the country and a late start to spring. The company said that comps were positive for much of the quarter, but dove during the first two weeks of April. Overall, net sales decreased 4.3% to $2.58 billion due to the closure of 141 stores last year, missing estimates at $2.63 billion. Gross margin was down 250 basis points to 35.9%, a sign the company was forced to mark down merchandise and that its business is operating less efficiently.
Adjusted net loss, as reported, was -$0.22, down from a profit of a penny per share last year, and missed expectations at -$0.20. Stripping out real estate sales and other such items, the company would have lost $0.31 per share, compared to a $0.29 per-share profit last year.
CEO Marvin Ellison acknowledged the disappointing results, but attempted to put a positive spin on the quarter, saying, "Overall we believe that our strategies are beginning to take hold, as we are seeing improvement in a number of areas. Apparel categories performed well during seasonable weather periods, and our beauty and home refresh initiatives performed well above our total comp sales performance for the quarter."
J.C. Penney maintained its comparable sales guidance for the full year at flat to 2% growth, but cut its full-year earnings forecast from $0.05-$0.25 to -$0.07 to $0.13. Penney's report was also particularly disappointing as rival Macy's reported strong numbers across the board yesterday, seeing its shares rise, and Penney was expected to have benefited from the bankruptcy of Toys R Us and the ongoing decline at Sears Holdings.
At this point, the window of opportunity for J.C. Penney to return to stable profitability seems to be closing.