Shares of J.C Penney tumbled Thursday after the struggling retailer posted a surprise loss for the holiday quarter, despite improving sales trends.
The company, which is trying to recover from a disastrous reinvention push by former CEO Ron Johnson, said sales rose 4.4 percent at established locations for the period ending Jan. 31 and for the year. But the company saw operating expenses edge up and is still working on improving its mix of merchandise to expand margins. Private label clothing brands, for instance, tend to be more profitable than name brands for the company.
"Not only are private brands more profitable, they're exclusive to JC Penney," said Marvin Ellison, who last year was designated to take over as CEO this summer.
Looking ahead to 2015, J.C. Penney said it expects sales to rise 3 to 5 percent at established locations.
Despite the improving trends, acting CEO Mike Ullman noted in a conference call Thursday that the company is "still trying to recover from the self-inflicted wounds of the previous strategy."
Under Johnson's tenure, the company had alienated customers and lost billions of dollars in revenue by getting rid of discounting and some basic merchandise. To help get the company back on track, Ullman came out of retirement and has been restoring sales and some of the goods Johnson got rid of. He's also trying to boost online sales; for the quarter, online sales from jcpenney.com were up 12.5 percent from a year ago at $428 million.
On the call, Ullman noted that the company still has potential to significantly grow sales in categories like shoes, handbags and accessories. Ellison also said the company needs to focus on "making its sales force more productive."
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For the quarter, J.C. Penney Co. said it lost $59 million, or 19 cents per share. Excluding one-time items, it broke even. Analysts had expected a profit of 12 cents for the period on that basis, according to FactSet.
A year ago, the Plano, Texas-based company posted a profit $35 million, or 11 cents per share, boosted by an income tax benefit.
Revenue for the latest quarter rose 2.9 percent to $3.89 billion, slightly higher than analysts' estimate of $3.87 billion.
For 2014, the company posted a loss of $771 million, or $2.53 per share. That's a narrower loss that the $1.39 billion, or $5.57 per share, it lost a year earlier.
Penney's shares slid almost 10 percent in aftermarket trading to $8.20.
