J.C. Penney reports quarterly loss after restructuring costs
By Lauren Coleman-Lochner Bloomberg News
NEW YORK - J.C. Penney Co., the U.S. department-store chain run by Apple Inc.’s former retail chief, posted a fourth-quarter loss on charges to revamp the company.
The loss totaled $87 million, or 41 cents a share, compared with net income of $271 million, or $1.13, a year earlier, the Plano, Texas-based retailer said in a statement. Excluding restructuring costs, profit was 74 cents a share. Analysts projected 67 cents, the average of 12 estimates.
CEO Ron Johnson, who took over in November, is overhauling the retailer’s pricing and store design to revive sales and lure shoppers from Macy’s Inc. and Target Corp. Last month, J.C. Penney cut its forecast for the fourth quarter, citing declining sales and deeper discounts than anticipated during the holiday shopping season.
J.C. Penney fell 0.5 percent to $41.71 at 10:14 a.m. in New York. The shares gained 8.8 percent last year.
In January, Johnson announced a three-tier pricing system and detailed plans to convert stores into a collection of branded shops surrounding a central space for events and services.
Fourth-quarter revenue fell 4.9 percent to $5.43 billion after the company exited its catalog and outlet businesses. Sales at stores open at least a year declined 1.8 percent.
The company reiterated a forecast that it would earn at least $2.16 a share excluding restructuring and pension costs this year. Including those costs, J.C. Penney predicted profit of $1.59 a share.
The year will include about $15 million of restructuring charges and $197 million in non-cash pension plan expenses. J.C. Penney said it also expects additional charges to revamp the company and will detail them in a later earnings report.
Fitch Ratings downgraded J.C. Penney’s issuer default ratings on Feb. 21 to BB+, one step below investment grade, from BBB- and cited “significant execution risk” from Johnson’s new strategy in the next 12 to 18 months.
“The jury remains out on whether consumers will buy into the new pricing structure and whether or not the company can turn around faltering sales and sustainably improve the profitability of its business,” wrote Monica Aggarwal, a Fitch analyst in New York.