JC Penney expects sales declines to continue in 2020, more store closures ahead

J.C. Penney‘s fourth-quarter earnings on Thursday topped analysts’ expectations, despite steep sales declines during the holiday season.

While CEO Jill Soltau said she has been encouraged by Penney’s progress, particularly in its women’s apparel business, the department store operator is still expecting 2020 will bring further declines in same-store sales.

The company has also said it expects to close at least six of its department stores in 2020. It shuttered 18 department stores and nine furniture shops last year. More specific details about these plans will be provided during an analyst day on April 7.

Its stock, which trades below $1, initially jumped in premarket hours, but then turned south, down 10% at midmorning.

Here’s how Penney did during its fiscal fourth quarter ended Feb. 1 compared with what analysts were expecting, based on data pulled by Refinitiv:

• Earnings per share: 13 cents, adjusted, vs. a loss of 6 cents expected
• Revenue: $3.49 billion vs. $3.44 billion expected
• Same-store sales: down 7% vs. a drop of 7.3% expected

During the fourth quarter, net income shrunk to $27 million, or 8 cents per share, from $75 million, or 24 cents a share, a year earlier.

Excluding one-time items, Penney earned 13 cents a share, better than the loss of 6 cents per share that analysts were expecting.

Total revenue fell 7.7% to $3.49 billion from $3.79 billion a year ago. Analysts were looking for revenue of $3.44 billion.

Penney is now calling for same-store sales in fiscal 2020 to be down 3.5% to 4.5%, excluding any impact from the coronavirus outbreak.

Total same-store sales in fiscal 2019 dropped 7.7%.

The Plano, Texas-based department store chain had already released disappointing holiday sales. Same-store sales over a nine-week period that ended on Jan. 4 dropped 7.5%, Penney said last month. Penney hasn’t reported a quarterly sales gain since the 2017 holiday season.

Penney, which has a market cap of $233.3 million, has watched its shares fall more than 40% over the past 12 months. 

Read the full earnings press release here.