J.C. Penney loses $163 million in Q1; same-store sales slide 18.9%

Dallas -- J.C. Penney Co. on Tuesday reported a wider-than-expected loss of $163 million, or 75 cents a share, for its fiscal quarter ended April 28, 2012, compared with a year-earlier profit of $64 million.

Excluding markdowns to reduce inventory levels, restructuring costs and pension-plan expenses, the loss was $55 million or $0.25 per share, compared with a year-earlier profit of 36 cents.

Same-store sales declined 18.9% in the quarter. Total sales dropped 20.1% to $3.15 billion, which J.C. Penney said included the effects of exiting its outlet business. Internet sales through Jcp.com were $271 million in the first quarter, plunging 27.9% from last year.

The company said that while sales were slower than expected, its transformation was ahead of schedule.

“Sales and profitability have been tougher than anticipated during the first 13 weeks, but the transformation is ahead of schedule,” said Ron Johnson, CEO of J.C. Penney. “While we have work to do to educate the customer on our pricing strategy and to drive more traffic to our stores, we are confident in our vision to become America's favorite store. We fully expect that the bold and strategic changes we are making to our operations will result in improved profitability and sustainable growth over the long term.”

J.C. Penney is in the midst of a major transformation, which includes a new everyday low pricing strategy that was launched on February 1, 2012. The strategy replaced Penney’s previous heavy reliance on promotions and discounting.

Gross margin narrowed to 37.6% from 40.5% due to lower-than-expected sales and the impact of deeper seasonal markdowns to clear inventory.