JC Penney Company Inc. (JCP - Get Report) plunged Thursday after it posted disappointing same-store sales figures that highlight the retailer's struggles in a competitive market that has already pushed Sears Holdings into Chapter 11 bankruptcy despite a surge in consumer sentiment and spending.
JC Penney said sales at stores open for more than a year fell 5.4% in the group's third quarter, which ended on November 3, pushing the Plano, Tx.-based department store chain to a wider-than-expected loss of 48 cents a share. The group also scrapped its full-year profit guidance.
"Our objective to put JCPenney back on a path to profitable growth is clear. In the coming weeks and months, I will continue to meet with and learn from our teams throughout the entire organization - talking with them about what we're doing that's working well and, most importantly, what we can do to address our opportunities," said new CEO Jill Soltau.
"While restoring JCPenney to sustained profitable growth will be a lengthy process, I understand the need for quick action," Soltau added. "My commitment is that we will make sound, strategic decisions backed by data, and will always be rooted in delivering on our customers' wants and expectations."
JC Penney shares were marked 5% in the opening 30 minutes of trading to change hands at $1.19 each, the lowest on record and a move that takes the year-to-date decline to nearly 63%.
JC Penney's difficulties suggest its not getting new customers from the Sears bankruptcy, with yesterday's stronger-than-expected third-quarter earnings from from rival Macy's Inc. (M - Get Report) indicating that cash-rich shoppers are growing increasingly attracted to its higher-scale offerings and newly-launched online platform.
The Conference Board's benchmark consumer confidence index hit an 18-year high of 137.9 last month as the nation's jobless rate fell to the lowest level since 1949, wages grew at the fastest pace in nearly a decade and inflation remains largely in-check at just over 2%.
Macy's said adjusted earnings for the three months ended on Nov. 3, came in at 27 cents a share, up 17% from the same period last year and well ahead of the Street consensus of 14 cents per share. Group revenues, the company said, slipped to 5.404 billion but matched the market's forecast. Comparable store sales rose 3.3% on an owned-plus licensed basis, Macy's said, adding it now sees full-year sales to rising between 0.3% and 0.7% and tacked 15 cents to its prior earnings estimate of $3.95 to $4.15 a share.
"Our strategic initiatives are gaining momentum and delivering results. Another double-digit quarter from our digital business and a strong stores performance combined to help us exceed expectation," said CEO Jeff Gennette. "We continue to see an improved trend in brick and mortar across the fleet with particularly strong results from our Growth50 stores."
"The holiday season is when Macy's truly shines. We have the right merchandise, the right marketing and the right customer experiences in place to deliver a strong fourth quarter," he added.
The group's gross margin, Macy's said, was flat from the same period last year at 40.3%, suggesting its drive to grow online sales is biting into its bottom line. It's also guiding for comparable store sales growth of between 2.3% and 2.5%, compared to a year-to-date tally of 2.7%, a figure that could be contributing to the stock's pre-market performance.
Macy's had said earlier this year that it would hire an additional 80,000 temporary workers over the holiday shopping season, which unofficially kicks-off with next week's Black Friday event, amid the best prospects for U.S consumer spending in at least 10 years.