NEW YORK, United States — J.C. Penney Co. cut its forecast for sales this year as demand for some of its main product categories remains under pressure, signalling that the department-store chain has more work to do in reviving consistent growth.
Comparable-store sales will rise 1 percent to 2 percent in the year through January, the Plano, Texas-based company said in a statement Friday. That’s down from a previous projection that they’d increase as much as 4 percent. The shares tumbled as much as 12 percent in early trading.
The forecast highlights the struggle chief executive officer Marvin Ellison’s faces in trying to rebuild J.C. Penney’s standing. Ellison has attempted to broaden the retailer’s assortment by adding appliances to 500 stores and expanding the number of locations selling Sephora cosmetics. But the moves fell short last quarter, with revenue dropping 1.4 percent and trailing analysts’ estimates, hurt by softness in apparel sales during the back-to-school shopping season.
“That’s concerning because back-to-school was their big push,” said Poonam Goyal, an analyst at Bloomberg Intelligence. “If your back-to-school didn’t do well, what gives you confidence in the holiday season? Why won’t your customer go somewhere else?”
J.C. Penney shares slid 8.1 percent to $8.10 at 8:17 a.m. in early trading in New York. The stock had surged 32 percent this year through Thursday as its comeback bid showed promise.
The chain’s same-store sales fell 0.8 percent last quarter, compared with an average estimate that they’d gain 2.7 percent.
Still, the net loss narrowed to $67 million from $115 million a year earlier, helped by lower costs. J.C. Penney also maintained its forecast that it would generate $1 billion in earnings before interest, taxes, depreciation and amortisation this year.
J.C. Penney’s underwhelming results follow better reports from rivals Macy’s Inc. and Nordstrom Inc., which both boosted their forecasts for the year on Thursday. The brighter outlooks had raised optimism that the department-store industry — suffering from a long-term decline in traffic as customers turn to online shopping -- would be able to weather the holiday season without heavy discounting.
Yet J.C. Penney’s outlook signals that those factors still weigh heavily on the industry and that the company faces a rough road ahead, despite its best efforts, Goyal said.
“They’re doing everything right,” she said. “I just think there are external headwinds that are keeping the customer less loyal to anyone .”
By Lindsey Rupp; Editors: Nick Turner and Kevin Orland.