By Phil Wahba
October 27, 2017

The bloodbath at J.C. Penney (jcp) has continued despite an economic environment that should be lifting the struggling department store’s business more.

The company’s shares fell 25% on Friday to a new all-time low of $2.75 after Penney slashed its 2017 sales and profit forecasts, blaming big markdowns it has had to take on its faltering apparel business.

J.C. Penney said it expects comparable sales to be up 0.6% to 0.8% when it reports its results for the third-quarter which ends on Saturday, in two weeks from now. But what unnerved investors was the deeper than expected adjust loss for the quarter of 40 to 45 cents that Penney expects to report, far worse than analysts’ average estimate of 18 cents, according to Thomson Reuters I/B/E/S.

The culprit was heavy discounting in Penney’s apparel lines, particularly for women’s apparel. That is a major setback for the company as it has tried to rejuvenate that part of its business. Under CEO Marvin Ellison, Penney has been trying to diversify away from apparel into areas like appliances and home improvement, notably to take advantage of Sears’ (shld) deepening problems. But apparel remains its largest business amid signs selling appliances is not moving the needle much quite yet.

“We took the necessary steps to accelerate inventory liquidation primarily across all apparel divisions, which increases available funding to invest in new and trending merchandise categories,” Ellison said in a statement.

Recently appointed Chief Financial Officer Jeffrey Davis will take on responsibility for the company’s pricing and planning policies to improve its predictive analytics, something Ellison has long said would be a focus, and arguably should already be firmly in place.

While the move will clean up Penney’s inventory heading into the holiday season, it is discouraging for the company that its fashion offerings are not catching on with customers, especially with a robust economy that would otherwise be lifting its sales, and its efforts to rejuvenate its house brands and launch new ones for underserved segments such as plus-size women.

Despite the sales gains in the third quarter, Penney now expects comparable sales, which exclude results of stores it has closed in the last year (140 or s0), to be down 1% to unchanged at best in fiscal 2017, a percentage point below its previous forecast for the year. The department store also slashed its full-year adjusted earnings forecast to 2-8 cents per share, from 40-65 cents.

Penney’s preliminary quarterly report brought down the shares of rivals Macy’s (m) and Kohl’s (kss) and left J.C. Penney with a stock market value of about $855 million, and shares down 75% from their 52-week high, hit just about a year ago.

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