"It may take longer than expected or planned to recover from our negative sales trends and operating results, and actual results may be materially less than planned," Penney wrote in its annual report for the fiscal year ended Feb. 2.
The company has backtracked partially on its pricing and brought back coupons in a bid to lure back shoppers.
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Penney, set to launch a new home section next month, said it may need to change its shops plan, but warned that could be expensive and could confuse shoppers.
"Any changes to our strategies could be substantial, and if implemented, could result in significant additional costs," the company wrote in the report filed with the Securities and Exchange Commission.
The company also said Wednesday that bondholders who claimed that it was in violation of a bond agreement have withdrawn their notice of default.
The struggling retailer filed a lawsuit last month to block the claim after receiving a letter from a law firm that represented more than half of the holders of the company's 7.4 percent bonds that are due in 2037. The law firm contended that Penney violated an inventory-secured credit agreement in January 2012 without providing security for the bondholders.
The bondholders threatened to make Penney repay the $326 million owed unless it took steps to fix the alleged violations within 90 days. That created concern among investors worried that forcing Penney to make accelerated debt repayments would strain its finances.
The withdrawal of the notice offers a bit of relief for Penney. The chain just finished a year of mounting losses and declining sales amid a transformation plan led by CEO Ron Johnson that has turned off shoppers.