The beleaguered department store chain said on Thursday that comparable sales, a metric that gauges business at stores open for at least a year, fell 3.5% during the key holiday season on an adjusted basis, a poor result that contrasts with an industrywide robust Christmas period. Late last month, Mastercard SpendingPulse said U.S. retail sales between Nov. 1 and Dec. 24 had risen 5.1% to top $850 billion, with online sales jumping about 19%. Penney will report full fourth quarter results on February 28.
The dismal sales results come at a period of tumult at Penney, which has failed to leverage a strong consumer environment along with the shrinking of bankrupt rival Sears Holdings (shld), and which saw a number of key executives including the chief executive and finance chief abruptly leave their posts last year. A new CEO, Jill Soltau, was named in October.
In theory, Penney should have also gotten a bit of a boost from the disappearance of Toys ‘R’ Us, yet despite having toy shops at many stores, the company was clearly not equipped to fight for scraps with the like of Target, Walmart, or even Kohl’s. The poor Christmas period showing also continues a downward turn in Penney’s performance: In the third fiscal quarter, comparable sales plunged and the company suspended its financial forecasts given the uncertainty.
Two years ago, Penney closed some 140 stores, hoping to focus on the remaining stores to improve their performance. But that has not happened and the company, which now has 860 locations, said it was looking into more store closings, with details to come when it reports its results next month. While Penney has been hit by the decline in shopper visits to weaker malls—many of which it co-anchors with Sears—it has also harmed itself with its inability to improve its e-commerce performance and by confusing shoppers in frequently changing tacks in trying to drum up business.
Last year, Penney conceded it had gone too far in pursuing young adults and ignoring its bread-and-butter customers, saying it would course-correct. The company has attempted a number of transformations, but even though Penney is third largest retailer in the U.S. as recently as the 80’s, it continues to reel.