J.C. Penney announced another quarter of dramatically slumping sales and profits—but the company’s CEO said its reinvention is “on track.”
Comparable store sales for the second quarter declined 21.7 percent. Total sales decreased 22.6 percent to $3 billion, which includes the impact of the Penney’s exit from the outlet business. Internet sales through jcp.com totaled $220 million, a 32.6 percent drop from the year before.
Overall, the company recorded a $147 million net loss in the second quarter. The prior year, it posted a $14 million profit.
The company said sales were adversely impacted by its decision to significantly reduce its marketing activities during the latter half of the quarter, as it reconsidered its approach to pricing.
The results were just as dismal as its first quarter results, where sales dropped 20 percent, and the company posted a $163 million loss, compared to a profit the prior year.
Under CEO Ron Johnson, J.C. Penney has radically transformed its business model, by switching to “everyday prices” and doing away with coupons.
“We have now completed the first six months of our transformation, and while business continues to be softer than anticipated, we are confident the transformation is on track,” Johnson said in a statement. “The transition from a highly promotional business model to one based on everyday value will take time and we will stay the course.”
“This month, we simplified our pricing, launched the ?rst of our new shops, and accelerated our marketing efforts to focus on brands, products, and value,” he added. “Early response to these efforts has been very encouraging … Our rock solid balance sheet will support the execution of our transformation and position us for growth beginning in 2013.