Earnings

JC Penney's quarterly comparable sales fall 0.8 percent

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JC Penney reported a surprise 0.8 percent fall in quarterly comparable-store sales on Friday, reflecting weak traffic, increased competition from online and off-price retailers and a general shift away from spending on apparel.

Penney, whose shares were down 8 percent in premarket trading, also cut its full-year sales growth forecast for stores open at least a year to 1-2 percent from 3-4 percent.

However, shares recovered to close nearly 4 percent higher Friday. The SPDR S&P Retail ETF (XRT) closed more than 1.5 percent higher.

Analysts on average had expected Penney's same-store sales to increase 2.7 percent in the third quarter ended Oct. 29, according to research firm Consensus Metrix.

Penney and other traditional retailers have been struggling to overcome intense competition from online retailers such as Amazon.com and off-price outlets such as TJX's T.J.Maxx, which offer deep discounts on apparel.

Penney, which caters mainly to lower-income shoppers, joins its closest rivals in reporting a drop in same-store sales in the latest quarter. Macy's, the biggest U.S. department store operator, reported a 2.7 percent decline while Kohl's posted a drop of 1.7 percent.

Penney's net sales fell 1.4 percent to $2.86 billion, missing analysts' average estimate of $2.95 billion, according to Thomson Reuters I/B/E/S.

The company also recorded its 11th straight quarterly net loss, of $67 million, or 22 cents per share. However, this was an improvement from last year's loss of $115 million, or 38 cents per share, as the company continued to cut costs.

Excluding items, Penney lost 21 cents per share, in line with the average analysts' estimate.

Still the company, like its rivals, was upbeat going into the most important shopping period of the year.

"We are excited about the initiatives we have in place to drive incremental growth during the holiday season," Chief Executive Marvin Ellison said in a statement.

Penney also said it was confident it would achieve $1 billion in earnings before interest, taxes, depreciation and amortization (EBITDA) in 2016, and the retailer reaffirmed its full-year forecast for positive adjusted earnings per share.

However, the company said it now expected gross margins to be flat for the full year, compared with 2015. The company had earlier expected gross margins to improve by 10-30 basis points.

In the latest quarter, the company's gross margin declined 10 basis points to 37.2 percent of sales.

Up to Thursday's close of $8.81, J.C. Penney's shares had risen 32.2 percent since the start of the year as the company outperformed its rivals in same-store sales, benefiting from falling unemployment and rising wages.