J.C. Penney wasn’t able to buck the trend of declining sales at U.S. department store chains this holiday season. But despite a steep sales decline, it reaffirmed its financial outlook for the year.
The company said its same-store sales over a nine-week period that ended on Jan. 4 dropped 7.5%.
Penney shares were down more than 3% in premarket trading Thursday following the news.
The retailer said that its adjusted same-store sales — which exclude the impact of its exit from major appliance and furniture categories — were down 5.3%.
Penney is still calling for same-store sales — a key metric that monitors sales at retailers’ stores open for at least a year — to drop 7% to 8% in fiscal 2019. Analysts have been expecting same-store sales to fall 7.4% during the fourth quarter, which includes the holiday season, according to a poll by Refinitiv.
The announcement follows one from rival Macy’s a day earlier, in which Macy’s said its holiday same-store sales dropped 0.6%. The decline wasn’t as bad as many had feared, sending Macy’s shares higher. CEO Jeff Gennette said Macy’s saw “a strong trend improvement from the third quarter,” igniting some optimism for the retailer’s turnaround plans.
Kohl’s said earlier Thursday morning that its same-store sales during November and December were down 0.2%. The drop led Kohl’s to lower the bar for its full-year profit outlook.
On the whole, department stores are expected to have underperformed during the 2019 holiday season.
The category of retailers that includes Penney, Macy’s, and Nordstrom, saw overall sales decline 1.8% from Nov. 1 through Dec. 24, according to Mastercard Spending Pulse, which tracked retail spending across all payment methods.
More shoppers are expected to have turned to retailers like Target and Walmart — which aren’t at traditional malls — for apparel, electronics, and other gifts. Many rung up purchases on Amazon as well. The e-commerce giant has already claimed 2019 was a record holiday.
Penney reported a narrower-than-expected loss during its latest fiscal quarter, ahead of the holidays. But sales declines are mounting. Penney hasn’t reported a quarterly sales gain since the 2017 holiday season.
The Plano, Texas-headquartered department store chain knows it has work to do to get back to growth. Analysts say one of the biggest overhangs for the embattled, 117-year-old company remains its real estate. Penney has more than 800 locations – arguably far too many, as more people turn to the internet to shop.
Penney CEO Jill Soltau told analysts in November: “I have not given any direction on what we’re doing with our [store] fleet closing or keeping open. … All I’ve said is that we are very close to our physical fleet and understanding what each store is contributing to the total business, as it relates to driving traffic.”
The company is expected to share more details regarding its holiday sales results when it reports earnings on Feb. 27.
Penney shares, which closed Wednesday at $1.20, have dropped less than 1% over the past 12 months. The company has a market value of $384.0 million.