J.C. Penney sales plunge, much worse than expected

(Reuters) - J.C. Penney Co Inc reported that sales at stores open at least a year fell 31.7 percent in the fourth quarter, even steeper than the sharp drop analysts expected for the struggling department store chain.

The poor results for the quarter, which included the holiday season, capped a rough first year for Penney's turnaround. The company's shares fell 8 percent in after hours trading.

Chief Executive Ron Johnson, who was brought in to revive the chain after running Apple Inc's retail business, tried to put a positive forward spin on events.

"Sales and customer traffic were below our expectations in 2012, but as we execute our ambitious transformation plan, we are pleased with the great strides we made to improve jcpenney's cost structure, technology platforms and the overall customer experience," he said in a statement.

Analysts had already been expecting same-store sales to decline 27.8 percent, but the even weaker figure put huge pressure on Johnson.

"He's going to have recover this year or he's done," said Ron Friedman, retail practice leader at the consulting firm Marcum LLP. "He's running out of time. He has to have it turned around by the third quarter."

Penney reported a net loss of $552 million, or $2.51 per share in the 14 weeks ended February 2, compared with a loss of $87 million, or $0.41 per share for a 13-week period a year earlier.

Excluding restructuring charges and non cash pension plan expenses, the company posted an adjusted loss of $1.95 per share, as net sales fell 27 percent to $3.88 billion. The loss was nearly three times worse than even the most pessimistic Wall Street estimate tracked by Thomson Reuters I/B/E/S, while sales were also below forecasts.

Gross margin was 23.8 percent of sales, down 6.4 percentage points from a year earlier. The company blamed lower-than-expected sales and a higher level of sales on clearance.

Retailers ranging from Kohl's Corp to Target Corp said the holiday was heavily discount-driven, putting additional pressure on Penney's no sales, no coupon philosophy.

The department store chain had $930 million in cash and cash equivalents at the end of the quarter.

(Reporting By Ben Berkowitz. Editing by Andre Grenon)

Source: http://news.yahoo.com/j-c-penney-fourth-quarter-same-store-sales-214244824--sector.html

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