J.C. Penney sales slide as new CEO tries to clean house

Bloomberg

As J.C. Penney Co. discounts more merchandise to clear the shelves of slow-moving inventory, investors are hopeful the painful overhaul is nearing its end.
The department-store chain, which has been aggressively trying to get the right mix of merchandise in stores, reported a sales contraction in its latest quarter. It also withdrew its prior 2018 earnings guidance, replacing a forecast for flat same-store sales with an expected low-single-digit drop.
Shares initially fell as much as 14 percent to $1.05 in New York after the earnings report — the lowest intraday level in decades — before erasing the loss and briefly turning positive.
“It seems as though people are placing bets on potential success,” Alex Arnold, managing director of the consumer sector at Odeon Capital Group, said. “They’re not showing e-commerce growth or that they have the right merchandising. But they are showing that they are taking the bull by the horns and that they are trying to shift things, so that’s hopeful.”
The company’s earnings report was the first under the leadership of Chief Executive Officer Jill Soltau, who took on the top role exactly a month ago. While a healthy US economy is buoying rivals’ results and powering a holiday shopping season that’s expected to be the best in recent memory, J.C. Penney is still working to formulate a strategy.
“J.C. Penney’s slump is deepening as clearance events sink sales and margin, making the need for bold changes all the more urgent for new CEO Jill Soltau to revive growth soon,” Bloomberg Intelligence analyst Poonam Goyal said.
“Getting inventory right the first time is critical to drive any growth.”
There’s been a growing divergence in the department-store industry, as some weather the changing retail landscape better than others.
Macy’s Inc., meanwhile, posted third-quarter same-store sales earlier that beat Wall Street’s expectations.