J.C. Penney released its latest earnings report before opening bell this morning, posting adjusted losses of 32 cents per share on $2.81 billion in revenue. Analysts had been expecting losses of 38 cents per share on $2.92 billion in sales. GAAP losses were 22 cents per share or $68 million, compared to last year’s GAAP loss of $150 million or 49 cents per share.

J C Penney Company Inc Plunges On Weak Q1 Sales

J.C. Penney’s same store sales slip

The struggling department store chain said comparable store sales declined 0.4% for the first quarter, compared to the consensus of a 3.2% increase. In last year’s first quarter, comparable store sales increased 3.5%. EBITDA increased 63% year over year to $176 million, while adjusted EBITDA climbed 80% to $153 million. Gross margin amounted to 36.3% of sales as J.C. Penney marked down inventory more aggressively than usual as a result of unseasonable weather. The company’s clearance selling margin improved, however, partially offsetting these markdowns.

Selling, general and administrative expenses declined $93 million to $872 million or 31% of sales, a year over year improvement of 280 basis points.

J.C. Penney said the Men’s, Sephora and Footwear, and Handbags departments were the best-performing segments. The retail chain said its North East and Ohio Valley stores were the best-performing regions in the U.S.

J.C. Penney updates guidance

Management also lowered their guidance for gross margin to an increase of 10 to 30 basis points for the full year as the retail chain prepares to roll out appliances and continues to improve its online business. They maintained their full-year guide of a 3% to 4% increase in comparable store sales despite the weaker-than-expected first quarter sales. Management cited “the positive nature of our recent sales trends the strength of our Sephora business and our decision to accelerate our appliance rollout” as the reasons for maintaining this metric despite the first quarter disappointment.

J.C. Penney expects EBITDA for the full year to be $1 billion and adjusted earnings per share to be positive. The retail chain also expects to improve its free cash flow compared to last year and decrease its selling, general and administrative expenses.

Shares of J.C. Penney declined by as much as 10.84% to $6.95 in premarket trading this morning.