NEW YORK – The legacy of J.C. Penney’s former CEO continues to cast a dark cloud over the department-store chain.
Penney on Thursday reported that it widened its loss in the first quarter on a 16 percent plunge in revenue. It marks the fifth straight quarter that the struggling company has posted massive declines.
The results show that Penney is still reeling from the turnaround plan orchestrated by its former CEO Ron Johnson, who was ousted last month after less than a year and a half on the job.
The plan included getting rid of most sales and coupons in favor of everyday low prices, bringing in hip brands like Joe Fresh and remaking outdated stores. But the changes that were meant to attract younger, wealthier shoppers wound up turning off loyal Penney customers who like sales and basic merchandise like loose-fitting khakis.
Penney last month rehired Johnson’s predecessor, Mike Ullman, who is adding back sales and bringing back some basics. The company also confirmed that Goldman Sachs will provide $1.75 million in financing, a move that eases worries that Penney could run out of cash this year.
But the Plano, Texas-based chain still faces big hurdles. Penney lost $348 million, or $1.58 per share, during the three months that ended on May 4. That compares with a loss of $163 million, or 75 cents per share, in the year-ago period. Revenue dropped 16.4 percent to $2.63 billion.
Wall Street had expected a loss of $1.06 per share on revenue of $2.65 billion, according to research firm FactSet. Revenue at stores opened at least a year — one measure of a retailer’s health — fell 16.6 percent. That was worse than the 15 percent drop analysts predicted.