JC Penney posts quarterly loss

JC Penney yesterday reported quarterly sales tumbled again last quarter, even as reinstated chief executive Myron Ullman worked to roll back his predecessor's failed merchandising strategies, but there were signs that customers were returning for the back-to-school season.

The company, which reported another steeper-than-expected loss, said sales trends improved every month in the quarter and that business so far this back-to-school period, the second-most important for Penney after the holidays, was “encouraging”.

Penney forecast it would have $1.5 billion in cash at the end of the year, enough to have ample merchandise on shelves.

But the lingering impact of Penney's failed efforts to remake itself into a more upscale destination in 2012 under previous chief executive Ron Johnson continued to weigh on results and chief executive Myron Ullman said the retailer still had a lot of work to do to steady itself.

“It is no secret that the company’s prior merchandising and promotional strategies weren’t working. We had to make changes, but these changes take time and they have financial implications,” Ullman said on a call with analysts.

Sales at stores open at least a year fell 11.9 per cent in the quarter, during which it reverted to a promotions-heavy strategy to try to stop the sharp sales decline.

The quarter was the first full period under Ullman, who had been chief executive from 2004 to 2011, since he returned in April to fix the damage wrought by Johnson, who left after his efforts led to a 25 per cent sales decline last year and a $1 billion loss.

The company’s gross margin fell 3.6 percentage points to 29.6 per cent of sales after it had to slash prices to clear merchandise shoppers did not want, much of which was brought in by Johnson who wanted to transform Penney into an emporium of dozens of boutiques each showcasing a trendy brand. – (Reuters)