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J.C. Penney Suffers Down Q4, Plans Store Closures

Store closings will continue at J.C. Penney, as the retailer posted comps and sales declines in its fourth quarter and fiscal year.  

Fourth quarter net income declined to $75 million, or 24 cents per share, from $242 million, or 77 cents per share, in the period a year earlier. Adjusted net income was $57 million, or 18 cents per share, versus $160 million, or 51 cents per share, in the period a year prior.

On a shifted basis, which compares the 13 weeks ended February 2 and February 3, 2018, and ignores an extra week in the year-prior fiscal quarter, comparable sales declined 4% versus the year-before period, while on an unshifted basis comps decreased 6%. Total net sales for the fourth quarter slipped 9.5% to $3.67 billion from the period a year previous.

J.C. Penney posted a full-year net loss of $255 million, or 81 cents per share, compared to a net loss of $118 million, or 38 cents per share, in the year earlier. Adjusted net loss was $296 million, or 94 cents per share, versus adjusted net income of $31 million, or 10 cents per share, in the year prior.

Comps decreased 3.1%, year over year. Total net sales for fiscal 2018 slid 7.1% to $11.66 billion from the year previous.

J.C. Penney said that it would close 18 full-line stores in 2019, including the three locations previously announced in January. It plans to close nine ancillary home and furniture stores as well, further aligning the brick-and-mortar operation with the omnichannel network while enabling the company to reallocate capital resources to locations and initiatives that have the greatest long-term value potential.

 As a consequence of the store closings, the company expects to record a pre-tax charge of approximately $15 million, primarily relating to non-cash asset impairments and transition costs. It expects almost all impacted stores to close in the 2019 second quarter.

“For the past few months, I have met with and listened to J.C. Penney associates throughout the organization, as well as our valued suppliers, customers and other partners, to gain their candid perspectives on our company, both positive and constructive,” said Jill Soltau, J.C. Penney’s recently appointed CEO. “Based on everything I have seen and heard, I am even more convinced that J.C. Penney is a revered brand that has the capacity to deliver improved results. In spite of our past financial performance, we have already taken meaningful steps to drive improvement in key businesses such as women’s apparel, active apparel, special sized apparel and fine jewelry. As we forge a path to sustainable profitable growth, our decisions included eliminating non-core and low gross margin product categories, significantly reducing unproductive inventory and continuing the revitalization of our women’s apparel business. While we are pleased with these actions, we know we need to move faster to reestablish the fundamentals of retail, build capabilities focused on satisfying our customers’ wants and needs, and ensure that our digital and store operations operate seamlessly to provide an experience that wins with customers. We have much work to do to position J.C. Penney for success and create long-term value for our shareholders, however our unwavering focus and discipline is already enabling meaningful progress.”