Even the comeback kid of retail J.C. Penney (JCP) wasn’t spared by the awful spring slamming retailers.
The department store chain was the latest to report weak first quarter comparable sales, posting a 0.4% decline, while analysts surveyed by Thomson Reuters were expecting a 3.3% jump. It was the first drop in 10 quarters.
Penney shares, which had already fall by one-third from a 52-week high in March, fell another 12% in premarket trading Friday.
J.C. Penney’s results follow even worse results from department store peers Macy’s, (M) Kohl’s (KSS) and Nordstrom (JWN) earlier this week. Department stores are struggling as shoppers move online to stores like Amazon.com (AMZN) or simply buy clothes for less at stores like T.J.Maxx. (TJX)
J.C. Penney has outperformed its rivals in recent quarters as it seeks to claw back sales lost in 2012 and 2013 when it failed disastrously to become hipper. Its renewed focus on its own, more profitable house brands, and rebuilding of its e-commerce have helped it post several quarters of growth that bested its peers’ numbers.
But the debt-laden company remains far from profitable, and any slowdown in sales unnerves investors. Penney re-iterated that it was on track for $1 billion in profit this year by a measure called EBITDA (earnings before interest, tax, depreciation and amortization) which is the metric its lenders look at most closely. And Penney’s sales this year are still expected to only hit $13.4 billion, or 33% below all-time peaks a decade ago.
Penney is betting that the expansion of more Sephora cosmetics boutiques, which typically generate four times more sales per square foot, within its stores, its recently launched home appliance areas and new lines such as its plus-size boutique for women will keep it on track.
“We remain confident that our turnaround remains on track, and we are excited about our 2016 sales drivers,” said Penney CEO Marvin Ellison, whom Fortune profiled earlier this year.
Penney stuck by its forecast that comparable store sales (sales at stores open at least a year plus e-commerce) will increase 3-4% despite the slow start, citing “recent sales trends.”
Total sales in the first quarter fell 1.6% to $2.8 billion dollars. Penney’s net loss fell 54.7% to $68 million.