Published:  12:28 AM, 13 August 2017

JC Penney hits record low on wider loss

JC Penney hits record low on wider loss A man with a Macy's bag walks past the JC Penney's store in New York, US. -Reuters

JC Penney Co Inc's stock hit a life-low as sweeping store closures and a challenging retail environment drove the embattled department store chain to report a bigger-than-expected quarterly loss and took a toll on comparable sales.

Penney's results were in contrast to those from industry stalwarts Macy's Inc (M.N) and Nordstrom Inc , both of which beat market expectations for second-quarter profit and comparable sales on Thursday. Shares in Penney, which were down 16 percent at $3.96 in morning trading, have tumbled 43 percent since the start of the year. The stock has widely underperformed those of peers such as Nordstrom and Kohls Corp, signaling that investors are taking note of which department stores are best reshaping themselves amid an ongoing retail meltdown.

"JCP has a much weaker balance sheet than many of its department store peers and has had to take a lot more corrective action to turn itself around ... Nordstrom is really in a league of its own," said Neil Saunders, managing director of research firm GlobalData Retail.

Department stores have been struggling with declining mall traffic and tough competition from off-price retailers and e-commerce behemoth Amazon.com Inc. Some chains, notably Nordstrom, have fought back by investing heavily in their own off-price stores and online presence.

Looking to cut costs and make more money from its sprawling real estate assets, Penney's, like Macy's, has been shuttering stores in failing malls, putting pressure on its bottom line. CEO Marvin Ellison said on a post-earnings call that liquidating inventory in 127 stores during the quarter hurt gross margins by about 120 basis points, a "much greater" hit than expected.

-Reuters


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