J.C. Penney is bucking the retail industry trend, but not in the good way.
The struggling department store chain reported that comparable sales fell 5.4% in the third fiscal quarter, far worse than the 0.8% declined analysts expected according to Consensus Metrix, and a disastrous result in a strong consumer spending environment. The results are all the more disappointing given the closing in the last year of dozens of Sears stores that would, in theory, offer J.C. Penney some market share growth opportunity. Penney also report a loss of $151 million.
The results sent shares down 12% to fresh-all time lows (JCP), giving the 860-store chain a market capitalization of just $384 million.
“While restoring J.C. Penney to sustained profitable growth will be a lengthy process, I understand the need for quick action,” freshly minted CEO Jill Soltau said in a statement. Soltau took the reins a few weeks ago, replacing former CEO Marvin Ellison who unexpectedly bolted in May for the top job at Lowe’s. Other executives also left Penney over the summer, creating a vacuum in the c-suite and injecting fresh turmoil at a critical juncture for Penney.
Penney also suspended its full-year profit forecast, citing the arrival of several new executives, and lowered its sales expectations, saying it now projects comparable sales to decline by a single-digit percentage.
While rivals like Macy’s have been investing in stronger e-commerce firepower, improving stores and bringing in new brands, Penney has been grappling with a high debt load that has handcuffed it, on top of the executive turnover. Macy’s on Wednesday reported stronger than expected financial results.
For the quarter ended November 3, total net sales fell 5.8 % to $2.65 billion.