JC Penney’s (NYSE: JCP) stock got crushed today after the retailer reported nightmare first-quarter earnings.
Same-store sales were down 19% from first quarter in 2011, while online sales plunged 28%. That was enough to send JCP stock down 19.7% today – the stock’s biggest one-day decline in 25 years. For the year, JCP stock has now fallen 24%.
This isn’t the debut newly minted JP Penney CEO Ron Johnson was looking for. The former Apple executive replaced former JC Penney chief Mike Ullman last fall. This was the first full quarter’s worth of earnings with Johnson at the helm.
The first-quarter numbers were ugly. The company reported a loss of $55 million, or 25 cents a share. JC Penney reported $152 million in losses the previous quarter.
The two straight losing quarters was enough to prompt the company to suspend its dividend. JC Penney instituted a 20-cent quarterly dividend last July, but is now ditching that payment altogether to save some money – perhaps as much as $175 million a year.
It wasn’t supposed to be this way for JC Penney. Johnson, who earned a big reputation after masterminding Apple’s retail operations unit, promised big changes when he took over at JP Penney. Those changes included cutting costs and major store overhauls.
It’s probably too early to fairly judge whether or not Johnson’s changes are working. But clearly the man’s work is cut out for him. The company’s 19% same-store sales drop-off is astoundingly bad.
Among major U.S. department stores, in recent years only Gap (NYSE: GPS) has come close to matching JC Penney’s first-quarter 2012 earnings weakness, when it posted a 14% loss in 2008. And that was during a recession.
So JC Penney’s first-quarter earnings were almost historically bad for a department store chain. Today, its investors are paying the price.