J.C. Penney Co. Inc.’s share price is in the red in early morning trading after the firm on Friday posted an unexpected revenue decline in the first quarter.
Despite narrowing its losses — posting a net loss of $68 million in Q1 2016 compared with a net loss of $150 million in the prior year — investors are likely hung up on the company’s sales slip.
JC Penney said its revenues declined 1.6 percent year over year, to $2.81 billion, from the prior year’s period when revenues were $2.86 billion. Market watchers had expected the firm to see revenue gains of 2.4 percent, to $2.93 billion.
Losses per diluted share were 22 cents in the quarter, compared with losses per diluted share of 49 cents in the comparable period. Analysts had expected the company to post a loss of 37 cents.
“The first quarter was really challenging from a top line perspective, and we’re disappointed of our results relative to our own expectations,” JC Penney CEO Marvin Ellison said during the firm’s conference call. “As you’ve heard throughout the week from other retailers, top-line sales were negatively impacted by many factors outside of our control. Having said that, at JC Penney, we have challenged our leadership team to focus on controlling what we control.”
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Ellison added that the company’s comps were also slightly down in the quarter but that he was pleased with the firm’s 63 percent increase in EBITDA, to $176 million.
The CEO said the company would maintain its annual comp guidance of 3 to 4 percent “as a result of the positive nature of our recent sales trends, the strength of our Sephora business and our decision to accelerate our appliance rollout.”
“However, we are lowering our full-year gross margin guidance to a 10 to 30 basis points increase for the year, reflecting the rollout of appliances and the rapid growth of our online business,” Ellison added. “We remain confident that our turnaround remains on track, and we are excited about our 2016 sales drivers including new Sephora locations, center-core enhancements and our nationwide rollout of major appliances announced earlier this week.”
For the quarter, men’s, Sephora, footwear and handbags were the company’s top performing divisions.