Penney's shares extend fall after surprise loss in quarter that included holidays

MarketsAssociated Press

J.C. Penney's stock fell further in premarket trading Friday, a day after the department store chain reported a surprise loss amid increasing expenses even as sales improved.

The Plano, Texas-based company also delivered a conservative sales outlook.

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Shares fell more than 14 percent in premarket trading. The results were released after the markets closed Thursday.

In a note to clients, UBS analyst Michael noted that the company is doing all the right things to turn around operations, but its latest results and outlook "underscore our fears that the financial burdens left for the company from the disastrous prior strategy will eventually override a long-term stock recovery." He continues to hold a "Sell" rating on the stock.

J.C. Penney is still trying to recover from a failed attempt to reinvent itself. Mike Ullman came out of retirement in April 2013 to retake the CEO post after Ron Johnson was ousted. Johnson had tried unsuccessfully to reinvent the chain by getting rid of most sales and some basic merchandise. That led to billions in losses and sales declines, and it has been a tough recovery.

Marvin Ellison, a Home Depot executive who came on board as president last year, is designated to take over as CEO this summer.

For the fourth quarter, J.C. Penney Co. said it lost $59 million, or 19 cents per share. Excluding one-time items, it broke even. Analysts had expected a profit of 12 cents for the period on that basis, according to FactSet.

A year ago, the company posted a profit $35 million, or 11 cents per share, boosted by an income tax benefit.

Revenue for the latest quarter rose 2.9 percent to $3.89 billion, slightly higher than analysts' estimate of $3.87 billion.

Revenue at stores opened at least a year rose 4.4 percent. The measure is considered a key indicator of a retailer's health.

Penney said it expects revenue at stores opened at least a year to be up 3 to 5 percent. That's below the 5 percent estimate that analysts were hoping for.

For 2014, the company posted a loss of $771 million, or $2.53 per share. That's a narrower loss that the $1.39 billion, or $5.57 per share, it lost a year earlier.

Shares of Penney fell 14 percent to $7.80 in premarket trading Friday. The stock has lost nearly 80 percent of itsvalue in February 2012, when investor optimism was high over Johnson's transformation strategy.