J.C. Penney holiday quarter sales drop, to shut 130-140 stores
By Sruthi Ramakrishnan
(Reuters) - Department store operator J.C. Penney Co Inc (JCP.N: Quote) reported a bigger-than-expected drop in same-store sales for the holiday quarter citing weak demand and competition from online retailers, sending shares down to more than a year low.
The company on Friday also said it would shutter 130-140 underperforming stores over the next few months to focus on more profitable ones.
Penney's results underscored the brick-and-mortar retail industry's struggles to overcome a drop in traffic in malls and a shift toward online shopping.
To save cash, retailers have been cutting costs and looking to make more money from their sprawling real estate assets. Rival Macy's Inc (M.N: Quote) said it was closing 100 stores and exploring deals with other retailers to lease parts of its stores.
Penney's comparable store sales fell 0.7 percent in the fourth quarter ended Jan. 28, steeper than the 0.5 percent drop analysts polled by research firm Consensus Metrix had expected.
The sales drop was the company's third quarterly decline this year.
Penney also said that increased promotional activity and handing out more coupons weighed on its margins, which fell 1 percentage point to 33.1 percent.
Costs related to rolling out its low-margin appliances business to more stores also hit margins during the quarter. Continued...