J.C. Penney tumbles as department store gloom deepens

J.C. Penney on Friday joined other department store chains in reporting a steeper-than-expected drop in same-store sales for the first quarter, sending the company's shares tumbling premarket to near record low levels.

Macy's Inc and Kohl's Corp on Thursday had also reported weak sales, underscoring the struggle by brick-and-mortar retailers to attract customers amid a slump in demand for apparel and the shift to online shopping.

Adding to retailers' problems, an unusually warm February hurt sales of winter wear, while a delay in tax refunds in the same month crimped spending in the February-April quarter.

Penney's net sales dropped 3.7 percent to $2.71 billion, declining for the third straight quarter and just short of the average analyst estimate of $2.77 billion, according to Thomson Reuters I/B/E/S.

Sales at Penney's stores open more than a year dropped 3.5 percent, steeper than the 0.7 percent decline estimated on average by analysts polled by research firm Consensus Metrix.

However, the weakness at brick-and-mortar retailers is not indicative of a drop in consumer spending.

Sales at clothing stores fell 0.5 percent in April, while sales at online retailers, such as Amazon.com Inc, jumped 1.4 percent, according to data released by the Commerce Department data on Friday.

To cope with slumping demand, Penney said in February that it would shut 130-140 underperforming stores and offer voluntary retirement to about 6,000 employees, following Macy's lead.

The costs related to the store closures and severance packages was partly responsible for Penney's net loss more than doubling to $180 million, or 58 cents per share, in the quarter ended April 29.

Excluding items, the company said it earned a profit of 6 cents per share.

Analysts on average were expecting a loss of 21 cents per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the company's reported number was comparable.

Penney's shares were down 6.6 percent at $4.94 in premarket trading on Friday, recovering from a swoon of more than 12 percent at one point. The stock is close to dropping past its record low of $4.90, hit in February 2014.