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Plunge Continues At JCP But Johnson Undaunted

J.C. Penney Co. continued to suffer serious sales declines and losses in the second quarter, but reiterated a determination to maintain its pricing and merchandising strategy as conceived. For the fiscal second quarter ended July 28, 2012, it reported an adjusted net loss of $81 million, or 37 cents per share, excluding restructuring and management transition charges, inventory transition markdowns, gain on the redemption of the Simon REIT units, net of fees and non-cash qualified pension expense.

On a GAAP basis, the company posted a net loss of $147 million, or 67 cents per share. Last year, in the second quarter, J.C. Penny recorded net income of $14 million, seven cents.

Second quarter comparable store sales for the declined 21.7%. Total sales decreased 22.6%, to $3.02 billion, a figure that includes the effects of the company’s exit from its outlet business. E-commerce sales through were $220 million in the second quarter, down 32.6% year over year. J.C. Penney noted that its decision to significantly reduce its marketing activities during the latter half of the quarter, as it reconsidered its approach to pricing and marketing in time for back to school, significantly impacted sales.

J.C. Penney’s results fall should of Thomson Reuters consensus estimates a net loss of 25 on $3.2 billion in revenue.

“We have now completed the first six months of our transformation and while business continues to be softer than anticipated, we are confident the transformation of J.C. Penney is on track,” said the retailer’s CEO Ron Johnson. “The transition from a highly promotional business model to one based on everyday value will take time, and we will stay the course. This month, we simplified our pricing, launched the first of our new shops and accelerated our marketing efforts to focus on brands, products and value. Early response to these efforts has been very encouraging. We continue to learn and adjust, and fully expect that our unique, specialty department store experience will drive J.C. Penney’s long term success. Our rock solid balance sheet will support the execution of our transformation and position us for growth beginning in 2013.”