Surprise, surprise. JCPenney (JCP) just releases its second-quarter numbers … and the results are best described as brutally bad. A quick recap of JCPenney earnings:
- Net sales fell 12% year-over-year, going from $3.02 billion to $2.66 billion and falling short of expectations by $100 million.
- Same-store sales declined roughly 12%, too.
- The company’s adjusted net loss came to $2.16 per share — almost twice as wide as the expected loss of $1.06, and 70% of the loss expected for the entire year.
JCP still is trying to reverse the killer no-sales policy that sent customers away in droves under the reign of former Apple (AAPL) star Ron Johnson. But it’s doing so by apparently going to the opposite extreme … which means slicing away margins. The ugly same-store sales reported in the JCPenney earnings announcement, for example, were blamed on “failed prior merchandising and promotional strategies, which resulted in unusually high markdowns and clearance levels in the second quarter.”
And as CEO Mike Ullman explained, “There are no quick fixes to correct the errors of the past.”
That’s for sure. It took retailer Gap (GPS) more than a decade to get back to its glory days after a similar fall from grace. Meanwhile, in the press release, JCP’s list of things to fix — including refined marketing, restoring merchandise inventory levels and improved performance of the website — was just as long as its quarterly results.
Then again, if you fall far enough, it doesn’t take much for your stock to soar again — just consider the 73% one-year climb of unprofitable Pacific Sunwear (PSUN), which still is trading at a fraction of its mid-aughts peak.
And, of course, that’s probably why the stock opened up by about 6% despite the fact that JCPenney earnings, in a vacuum, should have sent investors running screaming toward the exits.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.