J. C. Penney Company Inc. (JCP - Free Report) , which is slated to report its first-quarter fiscal 2013 results on May 16, recently came up with its preliminary sales results.
Blaming its earlier pricing and marketing strategy, the company stated that it expects to report total sales of $2,635 million, down 16.4% year over year. Moreover, comparable store sales are projected to decrease by 16.6% year over year as overhauling activities at its new home department across 505 stores hindered sales. The Zacks Consensus Estimate currently stands at $2,679 million.
Earlier, in a major development, Ron Johnson was ousted from his position after serving for 17 months as his ambitious transformational ideas failed to materialize.
Moreover, the company’s restructuring initiatives have been crumbling as the company is exhibiting no signs of improvement. Alongside, it is constantly lagging its peers, Macy’s Inc. (M - Free Report) , Target Corporation (TGT - Free Report) and Kohl’s Corporation (KSS - Free Report) in terms of performance.
Pricing had been the focal point of Johnson’s bold and strategic modifications and the probable cause behind the floundering of the turnaround efforts. The pricing strategy was aimed at keeping the prices low, and expected to allow the company to introduce new merchandises regularly.
However, J.C. Penney failed to obtain a positive response from customers for its pricing mechanism, which is well reflected through its poor sales results. It is believed that rather than harping on its restructuring efforts, the company should have been more vocal regarding its pricing mechanism and better aligned its marketing efforts to attract buyers.
The company also stated that it expects cash and cash equivalents to be approximately $821 million, while total debt is expected to be $3,818 million as of May 4, 2013.
Currently, shares of J. C. Penney maintain a Zacks Rank #4 (Sell).