J.C. Penney (NYSE:JCP) is still struggling to drum up shoppers. Shares of the meandering department store chain surrendered 17.1% of their value last week, following a disappointing quarterly report.

The struggling retailer posted an adjusted profit of $0.06 a share, but it would have clocked in with another steep deficit if not for a one-time operating asset sale. Net sales slipped nearly 4% to $2.7 billion, as comparable-store sales declined by 3.5% since the prior-year period. Analysts were holding out for $2.77 billion in net sales.  

Exterior of a J.C. Penney store opening.

Image source: J.C. Penney.  

Penney for your thoughts

There were silver linings in the report. Gross margin improved slightly, no small feat since a lot of the growth at J.C. Penney centered around major appliances and e-commerce that typically carry leaner markups. J.C. Penney also reiterated its guidance for the full fiscal year despite falling short this time around. Comps also improved as the fiscal quarter played out, as March and April started to claw their way out of a very challenging February. However, the glimmers of hope weren't enough to stop the stock from hitting fresh lows on Friday.

Outside of 2013 when the company was going through a sales-slurping transformation that ultimately fizzled out you have to go back a couple of decades to find the last time that fiscal first-quarter sales were lower than the $2.7 billion it rang in with last week. Wall Street's losing its cool when it comes to J.C. Penney, sending the shares to fresh lows on Monday morning after a few analysts tempered their enthusiasm.

Deutsche Bank analyst Paul Trussell at Deutsche Bank downgraded the stock from buy to hold, slashing his price target from $9 to $5.50. Trussell feels that his original bullish thesis that was calling for the chain to sustainably outperform its peer group has failed to materialize.

Paul Lejuez at Citi lowered his price goal from $6.50 to $4.50. He sees the pace of store closings having to pick up to offset retail sales shifting online. J.C. Penney had noted in last week's conference call that it may be keeping some of the stores it planned to close open a bit longer given the recent rebound in sales, but that seems like merely a temporary situation.

Mark Altschwager at Baird lowered his rating from outperform to neutral. He was with Trussell setting a price target of $9 ahead of the report, but now he's dropping that target all the way down to $5. With earnings quality eroding and industry headwinds intensifying, he just doesn't see the point in remaining bullish on J.C. Penney.

Finally, we have Jarrod Feinstein at Buckingham also downgrading the stock to neutral, shaving his price target in half -- to $5. The department store industry remains in a very promotional environment, and with J.C. Penney's stock now below $5, he fears some institutional investors will cut ties with the stock. J.C. Penney shares had a rough going last week, but this new week isn't off to a very encouraging start.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.