J.C. Penney Reports Wider-Than-Expected Loss (Update 1)
Updated from 8:10 am EDT with additional information.
NEW YORK ( TheStreet) -- J.C. Penney
The Plano, Texas-based company reported overall net sales for the quarter of $2.66 billion, down 12% from the prior year's quarter and below Wall Street's expectation of a 9% revenue decline to $2.75 billion.
J.C. Penney reported a net loss of $586 million, or $2.66 a share. Wall Street expected a loss of $1.06 a share.
The loss includes:
- A loss of 99 cents associated with its tax valuation allowance;
- 52-cent loss on retirement of debt associated with its tender offer;
- 21-cent loss related to restructuring and management transition charges;
- 4-cent loss for pension plan expenses; and
- a 28-cent gain on the sale of a non-operating asset.
The adjusted net loss for the quarter was $477 million, or $2.16 per share, excluding everything except the tax valuation allowance, J.C. Penney said.
"Since I returned to jcpenney four months ago, we have moved quickly to stabilize our business -- both financially and operationally -- and we have made meaningful progress in important areas of the business," J.C. Penney's CEO Myron 'Mike' Ullman said in the earnings release. "There are no quick fixes to correct the errors of the past. That said, we have identified the challenges, put solid plans in place to address them and have experienced and capable people in key roles to do so."
The stock jumped nearly 7% shortly after the numbers came out. At last check, shares were rising 2.5% to $13.55.
What investors are likely looking at is the improvement in J.C. Penney's monthly comparable store sales.
Comparable-store sales in the quarter dropped 11.9% from the year-earlier quarter, which the company blamed on its "failed prior merchandising and promotional strategies, which resulted in unusually high markdowns and clearance levels in the second quarter."
The company also put blame on its re-launched home departments, referring to it as a "lengthy renovation" and "disappointing re-merchandising" of the section, which also hurt comparable store sales by 240 basis points.
However, compared to the first quarter, comparable-store sales improved 470 basis points. In addition, sales improved sequentially each month within the second quarter, a trend the company said Tuesday it expects to continue through the back half of the year.
"Moving forward, we're focusing our efforts on regaining customer loyalty by offering trusted brands, award winning service and affordability that families can depend on," Ullman said. "We are encouraged by our early performance this Back to School season, which reflects customers' growing confidence in the brands and styles we offer."