On Friday, J.C. Penney posted a surprise drop of 0.8% in its comparable store sales for the just ended quarter. That reflected weaker traffic, more competition from off-price and online retailers and an overall shift by consumers on spending for apparel.
Analysts were expecting same-store sales at Penney’s to increase by 2.7% during the quarter that ended October 29. The miss helped to send shares of the retailer down by 9.3% during trading before the market opened.
Penney as well as other traditional retailers has struggled to overcome strong competition from retailers online such as behemoth Amazon.com and outlets specializing in off price such as T.J. Maxx, which give deep discounts for apparel.
Penney caters to mainly shoppers who are lower income and joins rivals in the reporting of a drop in sales at same-store during the most recent quarter.
Macy’s, the largest department store operator in the U.S. posted a decline of 2.7% in same-store sales while rival, Kohl’s posted a drop of 1.7% for the same.
Net sales at Penney were down 1.4% to end the quarter at $2.86 billion, which missed the estimate by Wall Street analysts of $2.95 billion.
The net loss for the company narrowed to only $67 million equal to 22 cents a share, from last year during the same period of $115 million equal to 38 cents a share.
This was the eleventh consecutive quarter where Penney posted a net loss. Excluding certain items, the retailer posted a loss of 21 cents a share, which did end up being in line with Wall Street estimates.
Nevertheless, the company remained upbeat in its statement headed into its all important holiday shopping period of November and December.
Marvin Ellison the CEO at Penney said the company was excited about its initiatives that have been put in place that will drive incremental growth throughout the important holiday shopping season.
J.C. Penney said that it remained on track to reach $1 billion in earnings prior to interest, taxes, depreciation and amortization or EBITDA for 2016. The company also reconfirmed its earnings forecast for the full year that called for positive per share adjusted earnings.
Traditional retailers continue to battle with online retailers by adding initiatives to attract shoppers and by increasing their own online presence on the Internet.