J.C. Penney posts smaller 1Q loss, raises sales guidance
NEW YORK (AP) -- J.C. Penney Co. on Wednesday raised its guidance for a key sales measure while reporting a narrower loss in the first quarter than it had a year ago.
The results offered some encouragement for investors worried about the company's slow turnaround. Penney has been trying to recover from a disastrous reinvention pushed by former CEO Ron Johnson.
Under Johnson's tenure, the company alienated customers and lost billions of dollars in revenue in a makeover that got rid of discounting and some basic merchandise. Johnson was fired in April 2013.
To get Penney back on track, the board brought back Mike Ullman out of retirement. He has been restoring sales and some of the goods that Johnson got rid of. Last year, the company named Marvin Ellison, a former executive at Home Depot, as president. He is designated to take over as CEO in August.
To drive sales, the company said Wednesday it plans to launch an online business for the beauty brand Sephora on Penney's website. The retailer has been expanding its exclusive Sephora shops, which have been key attractions.
The company is also working to boost its online business with new services. In the first quarter, the retailer saw more customers choosing to buy online and ship to a store. That results in more trips and extra purchases when they visit the store, Penney officials said. On average, that customer will spend 20 percent more on additional merchandise at the time they visit the store.
It also expanded the number of stores used to fulfill online orders to more than 160 of its 1,100 stores. Penney officials noted that a customer who shops both online and in the store buys two-and-a-half times more frequently in a year than a customer who shops only at a physical store.
The home furnishings area is also a big opportunity. The company was pleased with results of its spring home catalog and plans an additional catalog later. It's working with actress Eva Longoria on a new line of bedding.
"This year we are switching gears, going on the offensive to gain back share and grow our business profitably while executing our vision to become the preferred shopping choice for Middle America," said Ullman.
Still, Penney faces a tough road ahead.
The Plano, Texas-based retailer said that it lost $167 million, or 55 cents per share, in its fiscal first quarter. Losses, adjusted for one-time gains and costs, were 57 cents per share. It lost $352 million, or $1.15 per share, in the year-ago period.
The latest results surpassed Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for a loss of 79 cents per share.
The department store operator posted revenue of $2.86 billion in the period, which fell short the $2.87 billion expected by analysts surveyed by Zacks.
Revenue at stores open at least a year rose 3.4 percent for the three-month period that ended May 2. The figure is a key indicator of a retailer's health. Penney said that it now expects revenue at stores open at least a year to rise 4 to 5 percent, up from the original forecast of 3 to 5 percent.
Shares slipped 17 cents, or 2 percent, to close at $8.71 in regular market trading before the report was released. In after-hours trading, shares slipped 5 cents to $8.66. Shares are well below the $43 price that they reached when investor enthusiasm was high over Johnson's plan back in February 2012.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap ) using data from Zacks Investment Research. Access a Zacks stock report on JCP at http://www.zacks.com/ap/JCP
Keywords: J.C. Penney, Earnings Report, Priority Earnings