J. C. Penney Company Inc
once again fell short of expectations, with its turnaround plan
failing to deliver the desired results. The company remained in
the red with adjusted loss per share of $1.31 in the first
quarter of fiscal 2013, dashing all hopes of recovery, at least
in the near term.
The loss incurred was wider than the loss of 25 cents in the
comparable year-ago quarter. The Zacks Consensus Estimate for the
quarter was a loss of $1.16.
Including one-time items, the quarterly loss came in at $1.58
compared with the loss of 75 cents in the prior-year quarter.
J. C. Penney, in a major development, discharged CEO Ron
Johnson of his duties and its former CEO, Myron E. (Mike) Ullman,
III was reinstated to the helm.
Ron Johnson, who was appointed as the CEO with high
expectations, was ousted from his position after serving for 17
months. Within this span, Johnson announced a string of strategic
measures to bring the company back on its growth trajectory.
Despite the efforts, J. C. Penney's restructuring initiatives
have been crumbling as the company is exhibiting no signs of
improvement. Alongside, it is constantly lagging its peers,
) in terms of performance.
The company's quarterly sales of $2,635 million plunged 16.4%
year over year and fell short of the Zacks Consensus Estimate of
$2,639 million. Comparable store sales decreased 16.6% year over
year as overhauling activities at its new home department across
505 stores hindered sales.
J. C. Penney witnessed a 6% decline in traffic, while store
conversions edged down 1%. Moreover, average transaction value
waned approximately 10% during the quarter as its earlier pricing
and marketing strategy weighed upon the results.
Gross profit plummeted 31.5% to $812 million, whereas gross
profit margin contracted 680 basis points to 30.8%, signifying
lower sales and increased markdowns to clear inventory.
J. C. Penney's adjusted operating loss significantly widened
during the quarter and came in at $389 million compared with an
adjusted loss of $48 million in the year-ago quarter.
In the reported the quarter, J. C. Penney added 681 Joe Fresh
apparel shops within its stores and plans to add newly designed
home departments during the second quarter. For fiscal 2013, the
company has 60 Sephora inside jcpenney store openings on its
cards. Of these, 30 Sephora shops have been opened in the first
Other Financial Details
J. C. Penney ended the quarter with cash and cash equivalents
of $821 million, long-term debt of $2,868 million and
shareholders' equity of $2,866 million. The company drew $850
million from its $1.85 billion revolving credit facility during
the quarter and incurred capital expenditures of $214
Currently, J. C. Penney holds a Zacks Rank #3 (Hold), which
could witness a downgrade in the near term.
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