J C Penney Company Inc Tanks On Weak Same Store Sales

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J C Penney released its latest earnings report before opening bell this morning, posting adjusted earnings of 6 cents per share on $2.71 billion in revenue. Analysts had been expecting losses of 21 cents per share and $2.78 billion in sales. In the same quarter a year ago, the department store chain reported $2.81 billion in revenue and adjusted losses of 32 cents per share.

J C Penney’s losses widen

J C Penney’s net losses widened to 58 cents per share from last year’s losses of 22 cents per share. The net losses include restructuring charges of $220 million or 71 cents per share and benefits of $17 million or 6 cents per share from tax impacts and $4 million or 1 cent per share from primary pension plans. EBITDA fell to $40 million from $176 million a year ago, while adjusted EBITDA jumped 67% to $255 million. Same store sales tumbled 3.5% year over year, although the consensus had been expecting a decline of only 0.7%. The gross margin expanded by 10 basis points year over year to 36.3% as selling margins improved throughout the first quarter.

The retailer said comparable sales in its Home, Sephora, Fine Jewelry and Salon segments were all positive and performed the best of all the divisions. The company’s Southwest and Southeast regions were the best-performing geographic areas.

J C Penney affirms full-year guide

J C Penney reaffirmed the full-year outlook it had provided previously for same store sales to be between a decline 1% to an increase of 1% year over year. The retailer also reaffirmed its adjusted earnings guidance for between 40 cents and 65 cents per share. The company expects the full-year gross margin to rise by 20 to 40 basis points year over year.

The department store chain is moving toward retiring $520 million in outstanding debt. It used cash on hand to retire $220 million in outstanding bonds that matured last month. It also launched cash tender offers earlier this week and ended the first quarter with a liquidity position of about $2.4 billion.

J C Penney shares tumbled in premarket trade, falling by as much as 11.15% to as low as $4.73.

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