Weak sales, clearance deals and promotions have led struggling JCPenney to more than double its losses in the first quarter.
Net loss widened to $348 million in the three months to May 4, from $163 million a year earlier. Stripping out $72 million in restructuring and management transition charges, adjusted losses were $289 million, the company said.
Sales in the quarter fell 16.4% to $2.64 billion, down from $3.15 billion last time, with comparable store sales down 16.6%.
Gross margin was 30.8% of sales, down from 37.6%, impacted by lower than expected sales, a higher level of clearance merchandise sales and a return to some promotional activity towards the end of the quarter.
This is JCPenney’s first quarterly report following the departure of CEO Ron Johnson last month, after his radical revamp plans — including a move away from discouting towards an everyday-low price strategy — failed to resonate with customers.
The retailer, which has been forced to secure extra loans to stem its losses, has reinstalled former CEO Mike Ullman III reinstalled at the helm of the business.
“Our objective is to put JCPenney back on a path to profitable growth,” Ullman said yesterday. “To achieve this, over the past five weeks we have taken critical steps to stabilise the business, including improving our balance sheet and ensuring we have our senior leadership in place.
“With that accomplished, together our team is focused on developing and executing strategies to enable us to reconnect with our customer and improve traffic and sales, while operating with strong financial discipline.”
He added: “We are intensely focused on renewing customer excitement and loyalty through a combination of new attractions and long-beloved brands, with a promotional cadence that customers can appreciate and count on.
“There is a good deal of work ahead, but by listening to our customers and providing the shopping experience they want, we are confident we will deliver for them and improve performance for the benefit of our suppliers, associates and shareholders.”
Some analysts have warned that, if the company continues to lose money at its current rate, it could be bankrupt by Labor Day.
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