Ron Johnson may be turning off JCPenney shoppers, but he hasn’t lost his touch with Wall Street.
The struggling department store’s CEO said yesterday that his controversial turnaround effort is “on track,” despite a wider-than-expected quarterly loss of $147 million fueled by a stomach-churning sales drop of 23 percent.
After the dismal report, Moody’s Investors Service cut Penney’s credit rating even deeper into junk-bond territory.
Still, Penney shares — which have tumbled 34 percent this year amid a string of disappointments on Johnson’s watch — surged as much as 11 percent yesterday after Johnson delivered another pep talk to the Street.
The stock closed up 5.9 percent, or $1.30, at $23.40 yesterday.
“We said this would be a really tough year,” the former Apple exec told investors in New York yesterday, confusing many who had sat through numerous upbeat presentations of late.
“Somehow, I don’t think that message got through,” Johnson said. “Your expectation was much higher than ours but transforming a company is a marathon. It’s not a sprint. It takes time.”
While Johnson’s optimism goosed the company’s stock, his lecture struck some investors as nervy and even nonsensical.
That’s because Penney this year has fallen short of Johnson’s own projections for sales and margins, forcing him to backtrack on strategic blunders and raise cash by eliminating the company’s dividend and selling assets.
Johnson — who shocked investors in June by firing president Michael Francis, a former Target exec, after just eight months on the job — has since bagged a marketing campaign that flopped this spring and a three-tiered pricing strategy that confused customers.
Yesterday, Penney said it won’t meet its full-year profit outlook of $2.16 a share and declined to commit to a new number.
“The company pulled guidance, which it adamantly stated in January it would never miss,” Charles Grom, an analyst at Deutsche Bank, said in a note to clients yesterday.
To make matters worse, Penney dressed up its second-quarter loss by taking the unusual step of excluding the cost of markdowns and pension expenses, according to Grom.
Including those costs, Grom calculates that Penney lost 79 cents a share — more than twice the 37 cents a share that Penney reported.