J.C. Penney Company Inc. (JCP) reported a wider loss in the third quarter due to lower sales and a 5.4% decline in comparable sales. The bottom line came in narrower than analysts’ expectations while the top line missed consensus estimates. The retailer has withdrawn its previous full-year earnings guidance. Following this, the stock dipped over 9% in the premarket session.
Net loss widened to $151 million or $0.48 per share from $125 million or $0.40 per share in the previous year quarter. Adjusted loss per share decreased to $0.52 from $0.35 a year ago.
Net sales fell 5.8% to $2.65 billion. Comparable sales decreased 5.4% on an unshifted basis. Reflecting the calendar shift in 2018 due to the 53rd week in 2017, comparable sales declined 4.5%.
Credit income, which was previously reflected as a reduction to SG&A, was $80 million for the third quarter, up from $69 million in the prior quarter year. SG&A expenses fell 4% to $883 million on lower corporate overhead and incentive compensation.
Despite the weak top-line results, Jewelry, Women’s Apparel and Men’s were the company’s top performing divisions during the quarter.
Cost of goods sold, which excludes depreciation and amortization, was 68.1% of sales, up from 66% of sales a year ago. The increase as a rate of sales was primarily driven by planned markdown and pricing actions taken in the quarter to clear slow-moving and excess inventory.
J.C. Penney said it is appropriate to withdraw its previous 2018 full-year earnings guidance given its recently announced both a new CEO and an interim CFO and to allow the ability to effectively assess and address current and go-forward execution of the business.
Comparable store sales for fiscal 2018 are now expected to be down low-single digits compared to the previous estimate of about flat. The company continues to expect to achieve positive free cash flow for the year.
Shares of J.C. Penney ended Wednesday’s regular session down 4.69% at $1.22 on the NYSE. The stock has fallen over 59% in the year so far and over 57% in the past year.
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