(Reuters) - J.C. Penney Co Inc JCP.N shares sank below $2 for the first time on Thursday after it said it had alienated core middle-aged customers while chasing millennial buyers, and the venerable brand forecast an unexpectedly large loss.
The company’s shares fell more than 27 percent to $1.75 in morning trading, the lowest since it listed on the New York Stock Exchange a week before the launch of the Great Depression in 1929.
One of the big names in U.S. retailing, Penney has gone through three chief executives in five years as it struggles to figure out what shoppers want in an industry buffeted by fast-fashion chains and Amazon.com Inc AMZN.O.
Chief Financial Officer Jeffrey Davis said the chain might have undermined its traditional customer base of women over the age of 45 by revamping fashion lines to chase younger, trendier shoppers.
“We were no longer necessarily having the broad array of merchandise silhouettes that is most important for her (our core customer),” Davis said on a post earnings call.
To clear excess inventory, the company had to heavily discount not only seasonal merchandise but also its newer, trendier fashions, it said.
The discounting drove a wider-than-expected loss in the second quarter, while both revenue and same-stores sales also fell short of estimates.
“This flailing around is a symptom of a wider problem in that J.C. Penney no longer has a sense of what it wants to be and who it wants to serve,” GlobalData Retail’s Neil Saunders said.
The company's problems have been exacerbated by a lack of clarity on its leadership after CEO Marvin Ellison left abruptly in May to join home improvement chain Lowe's Cos LOW.N.
Penney’s said on Thursday it has met highly qualified candidates to replace Ellison, but has not made a decision yet.
It now expected its losses per share for the year to be between 80 cents and $1, much worse than a previous forecast which ran from a loss of 7 cents to a profit of 13 cents.
That will reflect further efforts to right-size its inventory and fix its apparel offerings in the months ahead.
According to Thomson Reuters I/B/E/S, analysts had expected a profit of 4 cents for the full year.
“It is critical for us to better manage our inventory levels, and focus on ... our core customers,” Davis said.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Anil D’Silva and Patrick Graham
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