The Canadian Press - ONLINE EDITION

JC Penney's sales trends improve in holiday quarter, but not enough; Shares tumble to near $5

  • Print

NEW YORK, N.Y. - The first increase in more than two years for a key sales measure at J.C. Penney was not enough to win over Wall Street, which punished the retailer's shares.

The company's stock plunged almost 11 per cent Tuesday, closing at $5.08.

Sales in established stores, a key measure of a retailer's health, rose 2 per cent during the November-January quarter. But analysts had expected a 4.2 per cent increase, according to FactSet estimates.

And it was not enough to erase from investors' minds a 31.7 per cent plunge in the sales measure for the 2012 holiday quarter. That period had capped a disastrous first year under former CEO Ron Johnson.

During the nine-week holiday period in November and December, the sales metric rose 3.1 per cent.

It was a brutal holiday season, which can account for 20 per cent to 40 per cent of a retailer's annual sales, for much of the retail sector.

The slow economic recovery, a stubbornly high unemployment rate and fierce competition from online retailers like Amazon.com forced traditional retailers to discount heavily just to get people through the door.

Heavy winter storms raking the United States in January have now cut into store traffic and weighed on post-holiday sales.

Chains including Wal-Mart Stores Inc., the world's largest retailer, have cut their profit outlooks.

But J.C. Penney does not have anywhere near the room to manoeuvr that Wal-Mart and other major retailers have.

The rate at which J.C. Penney burns through cash has led to a large exodus by investors.

On Tuesday, the company said that it ended 2013 with more than $2 billion in total available liquidity. That was in line with most estimates, but far from healthy for a company that recently posted its seventh consecutive quarter of big losses.

"We believe (J.C. Penney) could run into another liquidity situation by 3Q14," wrote Sterne Agee's Charles Grom. He said the company's sales trends need to get better, fast.

J.C. Penney is trying to recover from changes made by Johnson. He was ousted last April after 17 months on the job, and the company brought back Mike Ullman as CEO.

Ullman is trying to win back shoppers by restoring the sales events and basic merchandise ditched by Johnson, who was trying to target younger, wealthier consumers.

And earlier this month, the company announced thousands of jobs cuts and the closure of dozens of stores.

"While 2013 brought a lot of change and challenges to J.C. Penney, the steady improvements in our business show that the company's turnaround is on track," said Ullman.

For analysts who follow the company, the smaller-than-expected sales increase was at best a goal postponed during a rough time for retailers.

"Under the circumstances, it is progress," said Bernard Sosnick, a retail analyst at Gilford Securities. "I thought the holiday season would be a really significant turning point (for Penney), but it may be spring."

In Tuesday trading, the stock fell 60 cents to $5.08. Shares have lost 88 per cent of their value since early February of 2012 when investor enthusiasm was high over Johnson's transformation plan.

It's not clear how much the holiday sales gains, amid discounts at Penney, came at the expense of profits. Investors will find out when the company reports its fiscal fourth-quarter results on Feb. 26.

_______________

Follow Anne D'Innocenzio at http://www.Twitter.com/adinnocenzio

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Paul Maurice addresses media at end of 13/14 season

View more like this

Photo Store Gallery

  • MIKE APORIUS/WINNIPEG FREE PRESS BUSINESS - cow on farm owned by cattle farmer Lloyd Buchanan near Argyle Wednesday afternoon -see Larry Kusch's story  January 04/2006
  • JOE.BRYKSA@FREEPRESS.MB.CA Local-(Standup photo)- Humming Around- A female ruby -throated hummingbird fly's through the bee bomb  flowers Friday at the Assiniboine Park English Garden- Nectar from flowers are their main source of food. Hummingbirds wings can beat as fast as 75x times second. Better get a glimpse of them soon the birds fly far south for the winter - from Mexico to South America- JOE BRYKSA/WINNIPEG FREE PRESS- Sept 10, 2009

View More Gallery Photos

Poll

What are you most looking forward to this Easter weekend?

View Results

View Related Story

Ads by Google