When it comes to JCPenney’s results, “pleased” is a relative term.
Shares of the struggling department store on Tuesday tumbled to their lowest levels in half a century, despite the retailer’s positive spin that it reported a rise in fourth-quarter sales.
CEO Mike Ullman — who last month had alarmed shareholders with a vague statement that merely said he was “pleased” with holiday business — insisted on Tuesday that Penney’s turnaround was “on track.”
As evidence, Ullman cited a 2-percent gain in fourth-quarter same-store sales, and noted that Penney ended the year with more than $2 billion in cash — as promised.
Nevertheless, Penney shares tanked more than 10 percent, trading as low as $4.90 before closing at $5.08.
Investors scrammed because they had been expecting a same-store sales increase twice as big versus the year-ago fourth quarter, when same-store sales plunged 31.7 percent from 2011 under a botched turnaround bid by former CEO Ron Johnson.
Penney’s fourth-quarter sales gain was “just not good enough,” Sterne Agee analyst Charles Grom told clients in a research note.
“JCPenney needs the improvement to be much better than currently tracking,” Grom wrote. “It is becoming increasingly critical that the company starts to see meaningful improvement if it is to survive as currently constituted.”
Meanwhile, some investors lately have grown cynical about Penney’s communications with the Street. On Tuesday, the retailer declined to specify its sales for December or January, leaving analysts to calculate they were negative.
Penney also declined to specify its gross margins for the quarter, leaving open concerns that margins got hammered by steep discounting during the holidays.