J.C. Penney said its first quarter fell far short of Wall Street forecasts, weakened by dismal sales and costs related to its turnaround efforts.
The retailer swung to a $163 million, 75 cents a share, loss, down from a profit of $64 million, 28 cents a share, a year earlier. Analysts expected a eight cents a share loss.
"Sales and profitability have been tougher than anticipated during the first 13 weeks," new CEO Ron Johnson said.
Shares of J.C. Penney plunged nearly 12% to $29.30 in after-market trading.
Quarterly revenue declined by 20% to $3.1 billion. Analysts expected sales to reach $3.5 billion. Same-store sales also missed Street forecasts, falling 18.9%.
After the dismal quarter, J.C. Penney canceled its 20-cents-a-share dividend, and cut its earnings forecast. It no longer expects full-year GAAP earnings of $1.59 a share.
J.C. Penney brought in the new CEO, Johnson, the former Apple retail chief, last year, hoping to stop a slide in profit and sales. Revenues have dropped from $19.8 billion to $17.7 billion in four years. Even more worrisome: J.C. Penney went from a $511 million profit in 2008 to a $152 million loss last year. It has been out-maneuvered by rivals like Macy's, Nordstrom, Gap and Target.
Since taking control in November, Johnson laid out plans to turn the struggling retailer around. He announced store makeovers, centering departments around an area called The Square. Analysts say he's drawing from his time spent at Apple, trying to make The Square a cool hang-out not unlike Apple's retail stores. (See: Genius Bar? No, try clowns and yoga.)
Johnson also sought to move the company away from its heavy use of promotions, shifting it to a three-tier price structure. Since the new pricing scheme went into effective, it has initially worked only to confuse customers who weren't aware of the change, a recent Citi survey found.
As J.C. Penney tries to clear away old inventory, its first-quarter margins narrowed, from 40.5% to 37.6%. Fewer sales and seasonal markdowns also constricted margins, the company said.
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