J.C. Penney margins, sales plunge

Retailer J.C. Penney Co Inc's operating margins plunged in the first quarter on weak sales and heavy clearance deals.

Penney, struggling with mass customer defections after a failed strategic shift by former Chief Executive Ron Johnson, said gross margins came in at 30.8 percent, nearly 7 percentage points lower than a year earlier.

Total sales fell 16.4 percent and same-store sales declined 16.6 percent, in line with the company's warning last week.

Myron Ullman returned to Penney as CEO last month to stabilize the company, which suffered a 25 percent drop in sales last year after Johnson tried to wean the retailer's price-conscious customers off coupons.

"There is a good deal of work ahead, but by listening to our customers and providing the shopping experience they want, we are confident we will deliver for them and improve performance for the benefit of our suppliers, associates and shareholders," Ullman said in a statement.

Excluding restructuring charges and other items, Penney posted an operating loss of $1.31 per share in the quarter. That was worse than even the most pessimistic of Wall Street estimates compiled by Thomson Reuters I/B/E/S.

(Reporting By Phil Wahba and Ben Berkowitz; Editing by Bernard Orr)