JC Penney Cuts 3Q Outlook

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    NEWSLETTERS

    Associated Press
    JC Penney reported sluggish sales as customers cut back on spending.

    J.C. Penney Co.'s revenue at stores open at least a year slipped 0.6 percent in September, surprising analysts, who had expected an increase in the figure.

    The department store operator also lowered its third-quarter earnings guidance on Thursday, citing its softer-than-expected sales results for the first two months of the period.

    Its stock tumbled 89 cents, or 3.2 percent, to $26.75 in premarket trading.

    Analysts polled by Thomson Reuters predicted a 0.6 percent rise for J.C. Penney's September revenue at stores open at least a year.

    This metric is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

    J.C. Penney said Thursday that total revenue for the five weeks ended Oct. 1 fell 3.6 percent to $1.43 billion.

    The chain said the results were weaker than expected, but that it did see strength in children's clothing and women's accessories. The Southeast was the best performing region for September.

    Quarter-to-date revenue at stores open at least a year declined 1.2 percent, with total revenue down 4 percent to $2.8 billion.

    For the year to date, revenue at stores open at least a year gained 1.6 percent. Total revenue fell 1.3 percent to $10.65 billion.

    J.C. Penney said it now expects third-quarter earnings in a range of 10 cents to 15 cents per share, before restructuring charges. When including restructuring charges that are now predicted to be about 22 cents per share, the chain anticipates a loss of 7 cents to 12 cents per share. Its prior forecast was for earnings between 15 cents and 20 cents per share, which included restructuring charges of 5 cents per share.

    Analysts surveyed by FactSet forecast earnings of 17 cents per share, and typically exclude one-time items.

    The retailer also lowered expectations for its quarterly same-store revenue. J.C. Penney said that revenue at stores open at least a year is now expected to be about flat to the prior-year period. In August it predicted the figure would rise 2 percent to 3 percent. The company will report third-quarter results on Nov. 14.

    J.C. Penney announced three days ago that Target's top marketing executive Michael Francis would become its new president as it tries to redefine its brand. Penney has made a number of management changes recently as it tries to modernize its image. In June, the company had named Ron Johnson, who pioneered Apple Inc.'s hip retail stores, as its new chief executive.

    J.C. Penney has struggled as its middle-class customers face high unemployment and a weak economy. The store also has tough competition from other department stores such as Macy's Inc. and discounters such as Target Corp. and H&M.

    The Plano, Texas, company has changed its merchandise in recent years. It has moved from offering mainly store brands to filling its floors with trendy Sephora cosmetics shops and exclusive lines such as Cindy Crawford Style home furnishings.

    J.C. Penney said Thursday that it will be expanding its Sephora shops and Call it Spring by The ALDO Group to more locations. It will now have Sephora in 308 of its stores and Call it Spring in 505 locations.

    J.C. Penney runs more than 1,100 of its department stores in the U.S. and Puerto Rico.