(Reuters) - J.C. Penney Co Inc’s (JCP.N) same-stores sales missed Wall Street estimates for the first quarter, as unusually cold weather in April hit demand for spring clothing and it deeply discounted products to clear inventory.
The U.S. department store chain also cut its full-year profit forecast, blaming a change in accounting standards, which was another factor that sent the company’s shares down 12 percent to $2.71 in morning trading.
“They haven’t been able to get it right with their apparel mix. It’s not resonating with their consumers,” Ken Perkins at industry research firm Retail Metrics said, adding it has also been unable to keep pace with Macy’s Inc (M.N) online business and loyalty programs.
On Wednesday, Macy’s Inc (M.N) raised its annual profit forecast on strong customer spending and a greater assortment of products.
The retail landscape has been extremely brutal in recent years and J.C. Penney, like other department stores, has been struggling to draw shoppers who are defecting to online retailers and off-price stores.
“This is arguably the most challenging and competitive retail market that we’ve seen in over 50 years,” Chief Executive Officer Marvin Ellison said on a call with analysts.
“We spent an enormous amount of time over the past 18 months, fixing our apparel assortment and making necessary changes.”
However, its apparel business, which accounts for more than half of its total sales, continued to be a sore spot.
J.C. Penney said it could report an adjusted loss of 7 cents per share to a profit of as much as 13 cents per share for the year.
The company had forecast adjusted earnings per share of between 5 cents and 25 cents, excluding changes to accounting standards.
J.C. Penney’s same-store sales rose 0.2 percent in the quarter ended May 5, missing analysts’ average estimate of a 2 percent rise, according to Thomson Reuters I/B/E/S.
Excluding the weather impact, same-store sales would have risen 1.5 percent, which was still below expectations.
J.C. Penney’s first-quarter net loss narrowed to $78 million from $187 million a year earlier. Excluding one-time items, the company lost 22 cents per share, compared with analysts’ projection of a loss of 23 cents.
Net sales dipped 4.3 percent to $2.58 billion.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sai Sachin Ravikumar and Arun Koyyur