“Penney’s slashed its 2017 profit and comparable sales forecasts, explaining that the company has been discounting heavily ahead of the holidays to get rid of excess inventory.
Penney’s shares fell more than 20 percent on the news, reaching an all-time intraday low of $2.75 apiece. The stock was last trading closer to $3 per share.
The update also sent shares of retail rivals Macy’s, Kohl’s and Nordstrom lower, on fears that Penney’s downgraded outlook could mean worse news for the broader sector.
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JC Penney shares skid more than 20% after the retailer slashed its 2017 earnings forecast JC Penney shares skid more than 20% after the retailer slashed its 2017 earnings forecast
4 Hours Ago | 00:53
J.C. Penney had a disappointing update to share Friday morning, sending the department store chain’s stock prices tumbling to an all-time low.
Penney’s slashed its 2017 profit and comparable sales forecasts, explaining that the company has been discounting heavily ahead of the holidays to get rid of excess inventory.
Penney’s shares fell more than 20 percent on the news, reaching an all-time intraday low of $2.75 apiece. The stock was last trading closer to $3 per share.
The update also sent shares of retail rivals Macy’s, Kohl’s and Nordstrom lower, on fears that Penney’s downgraded outlook could mean worse news for the broader sector.
“With a sharper and more disciplined focus on inventory management, we are taking a comprehensive approach to assessing the effectiveness of our inventory positions to make swift, informed decisions that promote faster inventory turn and higher productivity levels,” Penney’s Chief Executive Marvin Ellison said in a statement.
“Therefore, in the third quarter, we took the necessary steps to accelerate inventory liquidation primarily across all apparel divisions, which increases available funding to invest in new and trending merchandise categories,” Ellison added.
Penney’s is now calling for an adjusted loss of 40 to 45 cents per share in the third quarter, compared with analysts’ average estimate of 18 cents, according to Thomson Reuters.
The retailer expects full-year same-store sales, a key metric monitored by investors, to be flat at best. Previously, Penney’s had forecast comps climbing as much as 1 percent.
The department store chain has also cut back its full-year profit forecast, now calling for adjusted earnings of 2 to 8 cents per share, down from 40 to 65 cents.
In a push to grow sales, Penney’s said it’s been focused on the women’s apparel category, adding more “casual and contemporary” options. But competition for female shoppers’ dollars stems from an increasing number of players, including Lululemon, TJ Maxx, Gap, Nike and even Amazon…
“While we acknowledge the positive work JCP is doing to become less apparel reliant (with initiatives like the expansion of home, appliances, beauty, and salon) the sector faces intense secular headwinds as mall traffic wanes and the shift to e-comm should also continue to weigh on profitability,” Jefferies analyst Randal Konik wrote in a note to clients.