JC Penney Company plummets after issuing profit warning

JC Penney Company Inc (NYSE:JCP) saw shares tank over 26% in pre-market as the department store chain was forced to cut profit forecasts amid declining demand for its stock.

Ahead of holiday season, the store, like many others, has been selling unmoving stock at a discount so it can freshen the shelves up for Christmas.

Notably it discounted women’s’ clothing in September and this month heavily as it battles to keep up with fast growing e-commerce rivals.

It doesn’t seem to be winning this fight as margins took a hit and it now expects an adjusted loss of 40-45 cents per share in the quarter ending October 28 – far bigger than analysts’ average estimate of a loss of 18 cents.

The group also cut its full-year adjusted earnings forecast to 2-8 cents per share, from 40-65 cents a share.

“We took the necessary steps to accelerate inventory liquidation primarily across all apparel divisions, which increases available funding to invest in new and trending merchandise categories,” Marvin Ellison, the chief executive, said in a statement.

Other department store groups fell too. Macy’s Inc (NYSE:M) lost 5.62% to US$20.14, while Kohl’s Corp shares shed 4.79% to US$42.50 each.

Story by ProactiveInvestors