J.C. Penney’s stocks declined Friday after the retailer reported weak sales and a massive business collapse in the first quarter.
Shares of the stock dropped as low as $4.48 intraday, such incident has not occurred since 1972, according to FactSet. The stock ceased around 14 percent on Friday at $4.55 per share. The department store operation collapse soared to $180 million, or 58 cents per share, in the first quarter, from $68 million, or 22 cents per share, in 2016.
The collapse dates back to February
This was largely due to weaker sales at brick-and-mortar locations during February and higher costs invested in the store shutdown and ending employees’ contracts, the company said.
In a statement, CEO Marvin Ellison said, “While February was a very challenging month for JCPenney and broader retail, we are pleased with our comp store sales for the combined March and April period, which improved significantly versus February.”
Surprisingly, the retailer reported that Home, Sephora, Fine Jewelry and Salon business segments all did well during the time and witnessed mounting sales.
Stocktaking at the end of Penney’s first quarter increased to $2.95 billion, compared to last year. Moreover, it kept mounting due to more floor samples for customers and effective ways of stocktaking in an attempt of boosting new Sephora shops.
GlobalData Retail Managing Director Neil Saunders stated in an email, “The real challenge for JCP is how to persuade customers visiting Sephora to become loyal JCP shoppers who visit and spend in other areas of the store.”
“The impact of having a popular beauty player as part of the offer cannot be underestimated. Without it, customer traffic and sales would have tumbled far further and faster; and JCP would have attracted far fewer younger shoppers.”
A sum of 138 stores are being shut down, and they are regarded as 13 or 14 percent of J.C. Penney’s stores, but garner around 5 percent of annual sales, according to the company.