J.C. Penney's operating margins plunged in the first quarter on weak sales and heavy clearance deals, but CEO Myron Ullman pledged to offer more promotions to turn things around.
The retailer's gross margins came in at 30.8 percent, nearly 7 percentage points lower than a year earlier. Total sales and same-store sales both posted double-digit declines, in line with the company's warning last week.
JCP suffered a 25 percent drop in sales last year when then CEO Ron Johnson stopped offering customers coupons because, he thought, there was no need for a coupon when your prices are at bargain prices every day. It turns out that coupons made Penney's price-conscious customers feel like they were getting a deal, even if a coupon wasn't necessary to get the deal.
After combing through JCP's results, professional traders Karen Finerman and Tim Seymour agreed the weak results can't be pinned on Ullman. After all, he only returned to Penney as CEO last month after the retailer fired Johnson.
Nevertheless, Finerman thinks JCP's results were so bad, she sees no reason to get behind the stock.