JC Penney Posts Narrower
Bloomberg News
, the department-store chain working to reverse three years of losses, posted a narrower first-quarter loss than analysts estimated as new merchandise and discounts helped sales. The shares surged.
The net loss in the three months ended May 3 held steady at $352 million, or $1.15 a share, compared with $348 million, or $1.58, a year earlier, the Plano, Texas-based chain said today in a statement. Excluding some items, the loss was $1.16 a share. Analysts projected $1.22.
Since Mike Ullman took back the chief executive officer job from Ron Johnson in April last year, he's reversed many of his predecessor's initiatives. Gone are changes to pricing, marketing and merchandise that Johnson made in a bid to revamp the chain and attract younger and wealthier customers. While Ullman's strategy has generated some sales gains, the chain continues to lose money.
'They are afloat but adrift,' Rick Snyder, an analyst at Maxim Group LLC in New York, said before the results were released. While the company is better off than a year ago, it still needs bigger sales gains at better margins for the turnaround to succeed, said Snyder, who recommends holding J.C. Penney stock.
J.C. Penney's revenue rose 6.3 percent to $2.8 billion last quarter, marking the first advance in three years. Analysts projected $2.71 billion. Sales would have risen in the fourth quarter if an extra week in the previous year had been excluded.
The shares rose 11 percent to $9.26 at 4:05 p.m. in late trading in New York. The stock had slid 8.5 percent this year through the close of today's regular trading.
To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland, John Lear
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