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J.C. Penney swings to $87-million loss in 4th quarter

The department store chain posts a loss of $87 million in its fiscal fourth quarter compared with a profit of $271 million a year earlier.

February 25, 2012|By Tiffany Hsu, Los Angeles Times
  • Shopper Cheryl Ang of Walnut looks at cosmetics in the J.C. Penney store at the Montebello Town Center in 2010.
Shopper Cheryl Ang of Walnut looks at cosmetics in the J.C. Penney store… (Allen J. Schaben, Los Angeles…)

J.C. Penney Co. is hoping that a turnaround strategy will someday make its most recent quarter, with its $87-million loss, just a bad memory.

The Plano, Texas, company, armed with a new chief executive and retooled pricing, said Friday that its fiscal fourth-quarter slide was caused by long-ingrained bad habits — such as rolling discounts and outdated stores — as well as by efforts to improve on them.

In the period ended Jan. 28, the $87-million loss, or 41 cents a share, was a plunge from a $271-million profit, or $1.13, in the same quarter a year earlier.

Same-store sales at locations open more than a year slumped 1.8% in the fourth quarter, while online sales slipped 3.1%. Overall revenue was down nearly 5% to $5.4 billion.

J.C. Penney's new chief executive, Ron Johnson — who left his executive post at Apple Inc. in November to join the retailer — said Friday in a conference call with analysts that he was making major changes, or as Johnson put it, he plans to "throw open the windows and let in some fresh air."

On Feb. 1, the department store chain instituted a simpler pricing method dubbed "fair and square," replacing the hordes of sales it used to scatter throughout the year. Under the new policy, prices on all products were lowered, with some items subject to monthlong sales. The chain will also offer clearance deals on the first and third Fridays of each month.

Also, the chain's locations will begin featuring mini-boutiques highlighting products from brands such as cosmetics maker Sephora and fashion label M by Mango.

And in December, J.C. Penney shelled out $38.5 million to acquire a 16.6% share of Martha Stewart's company while also cementing a 10-year deal with the lifestyle magnate to set up displays of her branded housewares. Macy's, which also has a deal with Stewart, has sued in an attempt to block the deal.

J.C. Penney's sales for the full fiscal year were down 2.8% to $17.3 billion. The company suffered a $152-million loss, or 70 cents a share, compared with a profit of $389 million, or $1.63, the previous year.

tiffany.hsu@latimes.com

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