Slammed by a 28% dive in sales and shrinking margins, struggling department store J.C. Penney (NYSE:JCP) disclosed a deeper-than-expected fourth-quarter loss of more than $500 million on Wednesday.
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Shares of J.C. Penney dropped almost 8% in extended trading on the latest disappointing results.
The company reported a net loss of $552 million, or $2.51 a share, compared with a loss of $87 million, or 41 cents a share, a year earlier.
Excluding restructuring and other charges, it lost $1.95 a share. Analysts had been bracing for a loss of 18 cents a share.
Sales tumbled 28.4% to $3.88 billion, trailing the Street’s of $4.08 billion. Same-store sales plunged 31.7%, while Internet sales dove 34.4% to $315 million.
Gross margins dropped to 23.8% from 30.2% due to lower-than-expected sales and higher levels of clearance merchandise.
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CEO Ron Johnson acknowledged that “sales and customer traffic were below our expectations in 2012,” but pointed to “great strides” in improving the company’s “cost structure, technology platforms and the overall customer experience.”
J.C. Penney reported a 10% year-over-year decrease in selling, general and administrative expenses for the fourth quarter to $1.21 billion. However, cash flow slid 32.3% to $645 million in the fourth quarter.
The quarterly net loss featured a slew of one-time items, including a charge of $148 million, or 41 cents per share, tied to lump-sum settlements from the company’s primary pension plan.
J.C. Penney also took a charge of $86 million, or 24 cents a share, related to impairment and the writeoff of certain store and store-related assets. Restructuring charges totaled $29 million, or 8 cents a share.
Looking ahead, J.C. Penney said it plans to open nearly 20 shops for home products in 505 stores during the spring. The company also plans to open almost 700 Joe Fresh apparel shops on March 15.
“We have accomplished so much in the last twelve months. We believe the bold actions taken in 2012 will materially improve the company's long-term growth and profitability,” Johnson said.
Johnson, who was recruited from Apple, has struggled to stem the bleeding at J.C. Penney since taking over in 2011. Sales have tumbled as Johnson has moved the department store away from coupons and other incentives despite the sluggish economy.
Shares of J.C. Penney have plunged almost 50% over the past 12 months, compared with a gain of about 5% for rival Macy’s (NYSE:M) and a 2% dip for Nordstrom (NYSE:JWN).
The Plano, Texas-based company saw its stock drop another 7.84% to $19.50 in after-hours trading on Wednesday.