J.C. Penney (NYSE:JCP) reported results after the bell today for the quarter ended April 28, during which it posted an adjusted net loss of $55 million, or 25 cents per share, excluding markdowns from its continued efforts to reduce inventory levels to align with its new strategy, restructuring and management transition charges, and non-cash qualified pension expenses. On a GAAP basis, the retailer reported a net loss of $163 million, or 75 cents per share.
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Here’s what CEO Ron Johnson had to say about the results:
“Sales and profitability have been tougher than anticipated during the first 13 weeks, but the transformation is ahead of schedule. Customers love the new jcp they discover in our stores. Our shop strategy has been applauded by vendor and design partners, our merchants have stepped up to the challenge of improving our merchandise and presentation, we have dramatically simplified our business model and reorganized our teams at headquarters and in our stores. While we have work to do to educate the customer on our pricing strategy and to drive more traffic to our stores, we are confident in our vision to become America’s favorite store. We fully expect that the bold and strategic changes we are making to our operations will result in improved profitability and sustainable growth over the long term.”
Comparable store sales in the first quarter declined 18.9 percent. Total sales decreased 20.1 percent. Internet sales were $271 million in the first-quarter, down 27.9 percent from the year-earlier quarter.
Gross margin was 37.6 percent of sales, compared to 40.5 percent in the year-ago period, impacted by lower-than-expected sales and deeper seasonal markdowns to clear inventory coming out of the fourth quarter of 2011. Lower margins were also the result of the company’s continuing efforts to reduce inventory levels, through which it booked a $53 million markdown. The company also incurred $76 million in restructuring and management transition charges.
The company anticipates further restructuring charges throughout the fiscal year as it continues to transform its merchandise assortment to align with its new strategy, which it announced in January, and may incur additional inventory write-downs as it exits certain lines of merchandise.
As a result of losses related to its restructuring, J.C. Penney no longer expects to meet its annual GAAP earnings guidance of $1.59 per share, but did affirm its non-GAAP earnings guidance of $2.16 per share.
The company also announced today that it will discontinue its 20 cents-per-share quarterly dividend, which will result in cash savings of approximately $175 million on an annual basis.
J.C. Penney shares were trading down over 12 percent in after-hours trading following the report.