News Column

JC Penney Continues to Struggle

February 28, 2013

Hadley Malcolm, USA TODAY


Good news for discounters and more bad news for the massively struggling J.C. Penney as four retailers announced fourth-quarter results Wednesday.

The slower and more competitive holiday season hit Target, while J.C. Penney continues to fight to get customers to embrace its new store design and waffling sales strategy. The company reported a net loss of $552 million in the fourth quarter, or $2.51 a share.

Revenue declined 28.4% to $3.8 billion. Same-store sales decreased nearly 32% for the quarter ended Feb. 2, worse than the 26.1% decrease JCP saw in the third quarter. Online sales, where most retailers are seeing huge growth, did even worse, decreasing 34.4%.

CEO Ron Johnson said in a call with investors Wednesday evening that he's learned from his mistakes in the past year and remains optimistic about the company's changes.

"We greatly look forward to year two of our transformation," he said. "This is the year the new JCP will take form."

Johnson took over as CEO of J.C. Penney in 2011, beginning a major transformation of the already-struggling company. After getting rid of sales in favor of everyday low pricing in 2012, J.C. Penney slowly brought them back after customers responded negatively to the strategy. J.C. Penney's stock was down 15% in after-hours trading to $17.96 a share.

T.J. Maxx and Dollar Tree both benefited from budget-conscious holiday shoppers and posted successful sales increases Wednesday. Same-store sales for the quarter increased 4% at T.J. Maxx and 2.4% at Dollar Tree. Net sales were $7.7 billion in the fourth quarter for T.J. Maxx, a 15% increase year over year. Sales at Dollar Tree also jumped about 15%, to $2.25 billion. The company reported earnings per share of $1.01, a 26.3% increase from the fourth quarter of 2011.

Target ended the year with a 2% drop in fourth-quarter earnings compared with a year ago. Same-store sales rose 0.4%, though the retailer made up for some of the holiday season with a stronger January. Same-store sales that month were up 3.1%.

(c) Copyright 2013 USA TODAY, a division of Gannett Co. Inc.

Source: Copyright USA TODAY 2013

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