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JC Penney to close stores as sales tumble

J.C. Penney on Thursday reported earnings and sales for the holiday quarter that topped analysts’ lowered expectations, as the company said it was successful in reducing a glut of unsold inventory in 2018.

But revenue was down sharply, and the company declined to provide a forecast for 2019 as it works to improve its financial performance.

Penney will additionally close nine of its home and furniture locations, as it looks to trim a massive real estate footprint to focus on its more profitable shops. Management also warned additional store closures are a possibility in 2020 and beyond.

“I think as we go forward — as we mentioned, we’re closing 18 [stores] this year,” Treasurer Trent Kruse told analysts. “I think it’s safe to assume that as you roll into 2020 and future years, it’s likely to see some continuation of that effort. [It’s] hard to say now, but I think that’s a fair read.”

Shares soared more than 20 percent in early trading on the news. As of Wednesday’s market close, the stock had tumbled nearly 70 percent over the past 12 months, to trade around $1.30. Penney’s market cap is roughly $473.1 million.

Here’s what Penney reported for the fourth quarter compared with what analysts were expecting, based on Refinitiv data:

  • Earnings per share, adjusted: 18 cents vs. 10 cents expected
  • Revenue: $3.79 billion vs. $3.78 billion expected
  • Same-store sales: down 4 percent vs. a drop of 4.3 percent expected

The retailer reported net income for the quarter ended Feb. 2 of $75 million, or 24 cents per share, compared with $242 million, or 77 cents a share, a year ago. Excluding one-time items, Penney earned 18 cents a share, 8 cents ahead of analysts’ forecast based on a survey by Refinitiv.

Revenue fell 8.4 percent, to $3.79 billion from $4.14 billion a year ago. That was slightly ahead of expectations for $3.78 billion.