JCP down 10% after missing on top and bottom line

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Last Update: 16-May-12 09:53 ET

JC Penney (JCP $29.96 -3.36) reported a first quarter adjusted loss of $0.25 per share, excluding non-recurring items, $0.17 worse than the Capital IQ Consensus Estimate of ($0.08). Revenues fell 20.1% year over year to $3.15 billion versus the $3.47 billion consensus. Comparable store sales for the first quarter declined 18.9%. Gross margin was 37.6 percent of sales, compared to 40.5 percent in the same period last year. Overall, compared to last year, gross margin was impacted by lower than expected sales in the quarter and the impact of taking deeper seasonal markdowns to clear inventory coming out of the fourth quarter of 2011. Additionally, the company announced that it will discontinue the $0.20 per share quarterly dividend. On an annual basis, this will result in cash savings of approximately $175 million, which will be used to help fund the broad-based transformation plan that JC Penney announced in January. The Company anticipates it will incur additional restructuring charges throughout the fiscal year as it takes aggressive action to further simplify its operations and its infrastructure. In addition, as the Company continues to transform its merchandise assortment to align with its new strategy, the Company may incur additional inventory write-downs as it exits certain lines of merchandise. Co issues downside guidance for fiscal year 2013; earnings per share won't meet $1.59 versus a $1.65 Capital IQ Consensus Estimate. The Company also reaffirmed non-GAAP earnings per share guidance of $2.16.