JC Penny Shares Sink Following Poor First Quarter Performance
JC Penney shares fell by as much as 9 percent earlier in the week following the company's disappointing first-quarter earnings report. The 117-year-old retail store chain lost a significant amount of store sales and reported net losses double that of its losses in the previous quarter. The retail chain blamed its poor performance on the closure of its in-store furniture and appliance businesses.
The firm had mentioned earlier in the year that it was going to be giving up its appliances business to focus more on its clothing offerings. The move resulted in a drop in comparable sales of 20 basis points. Stock prices sank by 9.6 percent on Tuesday, making the company the second biggest loser among the S&P 600 companies.
Overall sales for stores that have been open for at least 12 months dropped by 5.5 percent for the first quarter of this year. This is the sixth straight month that the company has reported a drop in its sales. The report also exceeded analysts' forecast of an expected 4.21 percent fall for the first quarter.
JC Penney also reported a loss of $154 million; almost double that of the previous quarter. Total revenues dropped by 4.3 percent to $2.56 billion. JC Penney lost a total of 46 cents per share, excluding one-time items.
According to the company's CEO, Jill Soltau, the company's performance will likely not improve following President Donald Trump's decision to increase tariffs on an additional $300 billion worth of Chinese goods. Soltau mentioned that the tariffs will impact the firm's national and private brands, more so when the fourth tranche of tariffs are implemented.
The executive also stated that the initial levies imposed by Trump had a minimal impact on its business, but any additional measures against Chinese imports could have a stronger effect.
To appease the minds of its investors, Soltau stated that the firm is working hard to overhaul its inventories to lessen its reliance on Chinese suppliers. The company has apparently been working on its strategy meant for such an occurrence for the "last several years." The firm also announced that it had hired former Sprouts Farmers Market Inc executive Shawn Gensch as its new chief customer officer. Gensch will be tasks in overseeing the company's marketing strategies and customer reach.
JC Penney's competitors have announced similar measures to lessen the impact of the ongoing US-China trade war. Last week, retailers such as Walmart and Macy's had announced that they may be forced to increase prices due to the imposed higher tariffs.