Financial Performance

JCPenney Reports Steep Drop in First Quarter Sales

The company’s CEO remains optimistic about the retailer’s future.
JCPenney Reports Steep Drop in First Quarter Sales

Just months after delivering a plan for a turnaround to its investors, JCPenney reported that it has underperformed analysts’ expectations with a sharp drop in sales.

The Plano, Texas-based department store chain on Tuesday announced financial results for its fiscal first quarter with a net loss of $154 million or 48 cents per share. Analysts predicted a loss of 38 cents per share.

Comparable sales decreased by 5.5% for the first quarter. The exit of the major appliance and in-store furniture categories in the first quarter had a combined negative impact of 20 basis points to comparable sales.

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Revenue for the quarter came in at $2.44 billion, missing expectations of $2.47 billion, according to analysts polled by Bloomberg.

Despite the negative sales report, JCPenney’s CEO Jill Soltau was optimistic about the company’s future, saying she is “encouraged by the early signs I am seeing in our business as we work to realize the potential that lies ahead.”

Fine jewelry, in addition to children’s, women’s, and men’s apparel were the company’s top performing divisions during the quarter.

“We have made good progress on each of our immediate action steps highlighted last quarter, including our continued efforts to reduce and enhance our inventory position,” Soltau said, “which resulted in a 16% reduction in our inventory and a meaningful improvement in our free cash flow this quarter.”

In the one bright spot of the report, the company expects to be free cash flow positive for fiscal 2019.

“Retail is a dynamic business with many touchpoints that together lead back to the customer experience. In everything we do, we are putting the customer at the center,” Soltau said. “My commitment is that we will make sound, strategic decisions backed by data and we will always be rooted in delivering on customers’ wants and expectations.”

JC Penney remains one of the nation’s largest apparel and home retailers, with more than 860 stores across the U.S. and Puerto Rico.

In a downward trend for several retailers, Home Depot delivered comparable disappointing store sales growth. The home improvement retailer saw its comp sales grow just 2.5% in the first quarter, versus the 4.3% that analysts expected.

Kohl’s also reported weaker-than-expected first quarter earnings results, sending shares 10% lower in the pre-market. The department store chain reported a 3.4% decline in comparable store sales.