J.C. Penney Q4 tops Street but warns sales decline will continue in 2020
J.C. Penney is not expecting much relief anytime soon in its sales performance.
The struggling retailer on Tuesday reported better-than-expected sales and earnings for its fourth quarter even as its sales continued to decline. Penney said it expects same-store sales in fiscal 2020 to be down 3.5% to 4.5%, excluding any impact from the coronavirus outbreak.
Penney’s net income fell to $27 million, or $0.08 per share, in the quarter ended Feb. 1, compared to $75 million, or $0.24 per share, in the year-ago period. Adjusted net income was $43 million, or $0.13 per share, better than the loss of $0.06 a share analysts expected.
Total net sales fell 7.7% to $3.49 billion from $3.67 last year. Analysts were expecting revenue of $3.44 billion.
Same-store sales decreased 7.0% for the quarter. Adjusted comparable store sales, which exclude the impact of Penney’s exit from major appliance and in-store furniture categories, decreased 4.7% for the quarter.
For the full fiscal year, Penney’s total net sales decreased 8.1% to $10.72 billion. Comparable store sales decreased 7.7%. Adjusted comparable store sales decreased 5.6% for the year
“In fiscal 2019, we met or exceeded all five financial guidance metrics for the year, and we delivered our third consecutive quarter of meaningful gross-margin improvement in the fourth quarter,” said Jill Soltau, CEO of J.C. Penney. “I am encouraged by our progress, especially in our women’s apparel businesses. We knew it would take time to restore discipline and return growth to J.C. Penney. As we move into fiscal 2020, we remain focused on the key tenets of retail as we continue rebuilding the company and implementing our Plan for Renewal.”
In e-mailed comments, Neil Saunders, managing director of GlobalData Retail, said that while Soltau and her team are doing their best to improve Penney’s position and attractiveness, the reality is that most stores deliver an experience that is well below par.
“They are messy, crowded with bland merchandise, and lack any energy or inspiration,” he said. “It is, therefore, hardly surprising that many shoppers are abandoning them. Despite attempts to understand consumers better, JCP’s management has yet to stem this tide. And doing so will be difficult as it will require radical change and impactful marketing to inform lapsed shoppers of the improvements. Both things require capital and a strong balance sheet, neither of which J.C. Penney has.” For more analysis, click here.