J.C. Penney (NYSE:JCP) reported a much worse than expected drop in sales for the first quarter of its fiscal year. Comparable sales declined 3.5 percent in the three months ended April 29, a steeper drop than the 0.7 percent expected by Wall Street analysts. The company’s financial losses doubled in the first quarter. Penney lost $180 million, or 58 cents per share, in the first quarter, more than the $68 million, or 22 cents per share, lost in the same quarter of last year.
On an adjusted basis, Penney’s earnings were 6 cents per share. Polled analysts were calling for a loss of 22 cents per share, according to Zacks Investment Research. Revenue fell short of estimates in the quarter. Penney’s revenue dropped from $2.81 billion to $2.71 billion, more than Wall Street had expected.
Penney blamed the loss on weaker sales at brick-and-mortar locations during February and higher costs related to store closures and employee severance packages. The company reported $220 million in restructuring charges associated with store closings and a voluntary early retirement program in the quarter.
Penney stuck to its 2017 sales forecast, despite the weak start to the year. The company still expects full-year adjusted earnings between 40 cents and 65 cents per share. Wall Street analysts predict earnings of 48 cents per share. The company expects comparable sales to fall within a range of negative 1 percent to positive 1 percent for fiscal 2017.
Penney CEO Marvin Ellison said in a statement, “While February was a very challenging month for J.C. Penney and broader retail, we are pleased with our comp store sales for the combined March and April period, which improved significantly versus February.”
Investors were not reassured. The company’s shares plummeted 8 percent after the earnings announcement to hit a new all-time record below $5. The shares were already near 40-year lows, having plunged nearly 42 percent in 2017.
Penney had been showing signs of coming back with moves such as bringing back appliances after more than three decades, expanding Sephora beauty shops within its stores, remaking its salon business, and introducing new plus-size apparel lines. The company is now equipping its workers with mobile devices to help online shoppers pick up orders at the store. Penney is also testing home services like heating, ventilation and air conditioning systems.