* Sales fall 31.7 pct vs analysts estimate 27.8 pct
* Analyst says CEO needs to right ship this year
* Cash holdings just under $1 billion
* Shares down more than 14 pct after hours
By Phil Wahba
Feb 27 J.C. Penney Co Inc reported sales
at stores open at least a year fell 31.7 percent in the fourth
quarter, a much worse-than-expected plunge that might put Chief
Executive Ron Johnson's future at the company at risk.
The poor results for the quarter, which included the holiday
season, capped a rough first year for Penney's restructuring.
The company's shares fell 14.5 percent to $18.09 in after hours
Johnson, who was brought in to revive the chain after
running Apple Inc's retail business, acknowledged that
he made a serious mistake in with pricing.
"We also made some big mistakes and I take personal
responsibility for these," he said on a conference call on
Analysts, who had already been expecting same-store sales to
decline 27.8 percent, said the even weaker figure put huge
pressure on Johnson.
"He's going to have recover this year or he's done," said
Ron Friedman, retail practice leader at the consulting firm
Marcum LLP. "He's running out of time. He has to have it turned
around by the third quarter."
Hedge fund manager William Ackman, whose Pershing Square
Capital Management is Penney's top shareholder, has repeatedly
professed his faith in Johnson's strategy and said it would take
a few years to come to fruition.
Penney reported a net loss of $552 million, or $2.51 per
share in the 14 weeks ended Feb. 2, compared with a loss of $87
million, or $0.41 per share for a 13-week period a year earlier.
Excluding restructuring charges and non cash pension plan
expenses, the company posted an adjusted loss of $1.95 per
share, as net sales fell 27 percent to $3.88 billion. The loss
was nearly three times worse than even the most pessimistic Wall
Street estimate tracked by Thomson Reuters I/B/E/S, while sales
were also below forecasts.
Gross margin was 23.8 percent of sales, down 6.4 percentage
points from a year earlier. The company blamed
lower-than-expected sales and a higher level of sales on
Retailers ranging from Kohl's Corp to Target Corp
said the holiday was heavily discount-driven, putting
additional pressure on Penney's no sales, no coupon philosophy.
The department store chain had $930 million in cash and cash
equivalents at the end of the quarter. Analysts had been closely
watching the cash figure to see if it dropped much below the $1
"Looks like they really did not burn that much cash,"
Morningstar analyst Paul Swinand said, pointing to the fact that
operating cash flow for the year was roughly neutral. "That's
surprisingly good for such bad results."