NEW YORK (AP) — J.C. Penney Co. tumbled 7 percent at the opening bell Wednesday after it issued a brief statement saying that it was "pleased with its performance for the holiday period," but no specific sales data.
The Plano, Texas, department store said Wednesday that the holiday period showed "continued progress in its turnaround efforts."
The short statement appeared to raise more questions about the struggling retailer than it answered, however.
"It's the lack of data that is freaking out Wall Street," said Brian S. Sozzi, the CEO at Belus Capital Advisors. "There's no meat to this report."
The statement had investors reading through the lines and coming to the conclusion that a lack of good news was bad news.
"If (J.C. Penney Co.) had good things to say about business trends, the company would have shared more— consistent with how the team shared information in the past," wrote Charles Grom, an analyst at Sterne Agee,
Penney had recently been releasing monthly sales figures, which had showed improvement. Sales at stores open at least a year edged up 0.9 percent in October — the first increase since December 2011.
That's a key indicator of a retailer's health, because it measures growth at ongoing locations by excluding results from stores recently opened or closed. Early last month, J.C. Penney said that comparable store sales jumped 10.1 percent in November, helped by a strong start to the holiday shopping season.
There were no such figures in the statement released Wednesday.
J.C. Penney did reaffirm its outlook for the fourth quarter that was first announced in late November. Penney said then that revenue at stores opened at least a year and gross profit margin will likely improve "sequentially" and year over year. It also said that total available liquidity was expected to be in excess of $2 billion at the end of the year.
Penney needs a good holiday season to help it recover from a failed turnaround attempt spearheaded by former CEO Ron Johnson. Penney's board ousted Johnson in April after 17 months on the job. The company brought back former CEO Mike Ullman.
J.C. Penney has since restarted the sales events that Johnson ditched. It's also restored basic merchandise, particularly store brands like St. John's Bay, which were either phased out or eliminated by Johnson in a bid to attract more affluent, younger shoppers. Under Johnson, the company brought in trendy names like Betsey Johnson and focused on every day prices, eliminating hundreds of sales.
Grom believes that given November's hefty sales increase, Penney's sales could have been down 6.7 percent in December and it could still post a gain for the fourth quarter assuming mid-single digit increases in January.
Penney will release its fourth-quarter earnings report next month.
SHARE ACTION: Shares fell 55 cents to $7.63 Wednesday morning. Shares have lost 81 percent of their value since early February 2012 when investor enthusiasm was high after Johnson revealed his turnaround plan.
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Original headline: Penney's shares tumble after holiday update
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