This Is Why J.C. Penney May Have Zero Choice but to Close 200 More Stores
J.C. Penney store.

Tough choices on how many stores should be open could haunt J.C. Penney ( JCP) again real soon. 
 
J.C. Penney Co. Inc. shares plunged nearly 20% Friday to an all-time low after the department store reported earnings far short of expectations.

For the quarter ending July 29, J.C. Penney reported sales of $2.96 billion, up 1.5% from the year-ago period, with same-store sales down 1.3% year-over-year. Analysts surveyed by FactSet expected sales of $2.84 billion, with a same-store sales decline of 1.2%. However, J.C. Penney's adjusted net loss of 9 cents a share was well above the consensus estimates of 4 cents a share.

J.C. Penney also reaffirmed its 2017 full-year guidance. The Plano-based company expects adjusted earnings of 40 cents to 60 cents a share, with same-store sales growth expected at -1% to 1%.

CEO Marvin Ellison said in a statement that the liquidation of inventory at 127 closing stores hit earnings per share and gross margin, but the company is "confident in our ability to further strengthen our balance sheet, while driving sustainable growth and long-term profitability."

More J.C. Penney stores could go dark very soon as the retailer tries to protect its margins from further slides.
 
"700 is likely the ultimate ideal fleet size [for J.C. Penney] based on current store volumes. Thus, we expect aggressive ongoing store closures over the next 2-3 years," wrote Morgan Stanley analyst Kimberly Greenberger in a note recently. J.C. Penney said earlier this year that it plans to close 138 stores stores by the end of the summer, representing 13% to 14% of its current store base.
 
The company currently has 875 stores in operation.
 
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Editors' pick: Originally published August 11.

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