The Plano, Texas-based department store chain reported net sales that slipped from a year ago to $2.76 billion. Same-store sales were flat for the quarter, below J.C. Penney's guidance of low-single-digit growth.
That said, the retailer was able to post a narrower net loss of 62 cents a share compared to a loss of $1.94 in the year-earlier period. J.C. Penney's gross margin also improved by 710 basis points to 36.6% of sales for the quarter from 29.5% in the same quarter last year.
For the full year, J.C. Penney now expects same-store sales to rise between 3.5% and 4.5% vs. the previous mid-single digit guidance. Gross margin is expected to rise between 500 and 600 basis points above last year, it said.
Shares were down 9.9% to $6.99 on Thursday with trading volume above its three-month daily average of 21.8 million shares. Here's what analysts said about J.C. Penney.
Kimberly Greenberger, Morgan Stanley (Underweight; $5.50 PT)
While there were a few positive surprises, JCP's 3Q results highlighted how difficult it is to recover both sales and GM in this environment. Flat comps against negative MSD y/y comparisons leave us less confident in our revenue forecasts. Lower PT to $5.50 and reiterate UW.
JCP missed 3Q top-line expectations materially and 4Q guidance appears aggressive: Flat 3Q comps (vs. 2.5% consensus) imply a 600-bp sequential deceleration from Q2. On a 2-year stacked basis, the deceleration is 110 bps. Management had originally guided 3Q comps to +MSD, but lowered it to +LSD on 10/8 after a slowdown in Sep. Comparisons get 680 bps more difficult next quarter, and management's 2-4% 4Q SSS guidance implies 880-1080 bps of sequential acceleration, which we view as unlikely. We lower our 4Q [same-store sales expectations] to 1% and FY14 to 3.1%.