J.C. Penney Loses $147 Million in Second Quarter as Sales Plummet
PLANO, Texas-J.C. Penney's losses continued in its fiscal second quarter, totaling $147 million as opposed to net income of $14 million in its second quarter of last year.
The quarter, which ended on July 28, marked the fourth in a row of red ink for the department-store retailer. Meanwhile, net sales went on a 22.6 percent slide in the quarter, totaling $3 billion and including a same-store sales drop of 21.7 percent. The same-store decline came on top of a first-quarter comparable-store sales fall of 18.9 percent, along with a decrease in total net sales of 20.1 percent.
CEO Ron Johnson acknowledged that J.C. Penney's business has been "softer than anticipated," and the company said much of the adverse impact on sales came from its decision to significantly reduce its marketing activities during the latter half of the quarter, as it reconsidered its approach to pricing and marketing in time for back-to-school.
Johnson said, nevertheless, that he is confident that J.C. Penney's transformation "is on track. The transition from a highly promotional business model to one based on everyday value will take time, and we will stay the course."
Johnson added that this month J.C. Penney simplified its pricing, launched the first of its new shops and directed its marketing efforts toward a focus on brands, products and value. "We continue to learn and adjust," he said, "and fully expect that our unique, specialty department-store experience will drive J.C. Penney's long-term success."
Gross margin in the second quarter took a 511 basis-point dive to finish at 33.2 percent. Selling, general and administrative expenses, while they fell 15.5 percent, increased 293 basis points as a percentage of sales to 34.8 percent.