J.C. Penney plans to close more stores after a weak holiday sales season.
Profit tumbled nearly 70 percent and revenue slid 8 percent in the fourth quarter, the most crucial period of the year for retailers who bank on a surge in holiday sales.
The company did beat Wall Street expectations, and shares jumped 22 percent before the opening bell Thursday. Shares were trading at $1.53 each shortly after the market opened.
The Plano, Texas, company, which has been closing stores for years, said Thursday that it would turn the lights out at another 18 department stores, as well as nine home and furniture stores. The list includes three store closures the retailer announced in January. Penney did not specify which stores would be closing but said most of the closures would take place in the second quarter.
J.C. Penney, which has about 870 stores nationwide, operates five department stores in the Indianapolis area.
The chain's deteriorating sales underscore the labyrinth of challenges facing CEO Jill Soltau, who took the top job at J.C. Penney in October. Scores of retailers broadsided by a rapid shift in consumer behavior have filed for bankruptcy protection, including rival Sears and Kmart. Others have simply liquidated.
Under Soltau's leadership, the company is focusing again on women's clothing and accessories, which carry higher profit margins.
That would reverse measures undertaken by her predecessor, Marvin Ellison.
And, after a three-year venture, the retailer already decided to take big appliances out of stores after it began selling them again in an attempt to capitalize on problems at Sears.
"The central problem for (J.C. Penney) is that it no longer gives shoppers reasons to visit stores and to make purchases," said Neil Saunders, managing director of GlobalData Retail. "In other words, it has lost sight of why it exists. This is evident across both stores and online where a hodgepodge of products are thrown together in a seemingly random fashion."
J.C. Penney posted profit of $75 million, or 24 cents per share, for the quarter. That compares with $242 million, or 77 cents per share, a year ago.
Adjusted per share was 18 cents per share, 7 cents better than analyst had projected, according to a survey by FactSet. Revenue was $3.78 billion, also beating expectations.
But same-store sales, a closely-watched barometer of health in the retail sector, slid 6 percent.
J.C. Penney will take charges of $15 million in relation to those closings during the first half of this year.
"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 Soltau in a in a written statement. "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."
Saunders lauded Soltau's leadership so far, saying J.C. Penney's travails predate her. But he said time is limited.
"Ms. Soltau has noted that J.C. Penney is a revered brand, but such warm sentiments will ultimately mean little unless the company focuses on its customers," Saunders wrote.