J.C. Penney Q2 misses as loss widens and CEO hunt continues
J.C. Penney widened its loss in the second quarter amid markdowns related to inventory issues and its ongoing search for a chief executive.
The department store retailer reported a net loss of $101 million, or 32 cents per share, for the quarter ended Aug. 4, compared to a loss of $48 million, or 15 cents per share, in the year-ago period.
Excluding items, J.C. Penney lost 38 cents per share, which was worse than the loss of 6 cents per share analysts had expected.
Penney said it bought more inventory than it sold during the quarter due to prior purchase commitments, which resulted in markdowns. “Inventory receipts continued to outpace total sales performance this quarter due to prior purchase commitments,” stated Jeffrey David, CFO. “As such, we took necessary actions to markdown and clear excessive inventory positions across many of our categories, which encompasses more than just seasonal product or fashion misses.”
Net sales fell 7.5% to $2.76 billion, missing expectations of $2.86 billion, which reflected the closing of some 140 stores in the period. Same-store sales inched up 0.3%.
Penney has been without a CEO since Marvin Ellison stepped down at the beginning of July to take the helm of Lowe’s. The company is being run by a team of executives while it searches for a new leader.
“The hiring of a new CEO is the top priority of the board of directors and we will continue to expedite the process in order to bring this search to a successful conclusion,” said Ronald W. Tysoe, board chairman, who noted that the board has met with “highly qualified candidates who have expressed a strong desire to become the next leader of J.C. Penney.”
Penney's disappointing results came as the nation is experiencing strong economic growth, which has benefited retailers across the board.
“The most worrying thing about the results is that if JCP can't perk itself up at a time when the retail mood is elevated, it suggests that there are fundamental weaknesses in the company's position,” commented Neil Saunders, managing director, GlobalData Retail. “One of the key problem areas is fashion where JCP remains unfocused and unsure about its strategy. Indeed, the company has changed direction several times -- first trying to attract younger shoppers, then younger moms, and now back to older shoppers.” For more click here.
Going forward, Penney will continue to take actions to “right-size our inventory, better curate out assortment and most importantly, provide a solid foundation that we can continue to build upon as we move forward,” said CFO Davis.
Consequently, he added, the company is reducing its earnings guidance for fiscal 2018. Penney now expects to post a loss for the year in the range of 80 to $1 a share and flat sales. Previously, it had forecast sales up as much as 2% for the full year and a profit of as much as 13 cents a share.
The department store retailer reported a net loss of $101 million, or 32 cents per share, for the quarter ended Aug. 4, compared to a loss of $48 million, or 15 cents per share, in the year-ago period.
Excluding items, J.C. Penney lost 38 cents per share, which was worse than the loss of 6 cents per share analysts had expected.
Penney said it bought more inventory than it sold during the quarter due to prior purchase commitments, which resulted in markdowns. “Inventory receipts continued to outpace total sales performance this quarter due to prior purchase commitments,” stated Jeffrey David, CFO. “As such, we took necessary actions to markdown and clear excessive inventory positions across many of our categories, which encompasses more than just seasonal product or fashion misses.”
Net sales fell 7.5% to $2.76 billion, missing expectations of $2.86 billion, which reflected the closing of some 140 stores in the period. Same-store sales inched up 0.3%.
Penney has been without a CEO since Marvin Ellison stepped down at the beginning of July to take the helm of Lowe’s. The company is being run by a team of executives while it searches for a new leader.
“The hiring of a new CEO is the top priority of the board of directors and we will continue to expedite the process in order to bring this search to a successful conclusion,” said Ronald W. Tysoe, board chairman, who noted that the board has met with “highly qualified candidates who have expressed a strong desire to become the next leader of J.C. Penney.”
Penney's disappointing results came as the nation is experiencing strong economic growth, which has benefited retailers across the board.
“The most worrying thing about the results is that if JCP can't perk itself up at a time when the retail mood is elevated, it suggests that there are fundamental weaknesses in the company's position,” commented Neil Saunders, managing director, GlobalData Retail. “One of the key problem areas is fashion where JCP remains unfocused and unsure about its strategy. Indeed, the company has changed direction several times -- first trying to attract younger shoppers, then younger moms, and now back to older shoppers.” For more click here.
Going forward, Penney will continue to take actions to “right-size our inventory, better curate out assortment and most importantly, provide a solid foundation that we can continue to build upon as we move forward,” said CFO Davis.
Consequently, he added, the company is reducing its earnings guidance for fiscal 2018. Penney now expects to post a loss for the year in the range of 80 to $1 a share and flat sales. Previously, it had forecast sales up as much as 2% for the full year and a profit of as much as 13 cents a share.