J.C. Penney active as retailer reports results, including sales drop

By Paul Deckelman

New York, Aug. 20 - J.C. Penney Co., Inc.'s bonds were being actively traded on Tuesday morning, after the underachieving Plano, Texas-based department store retailer reported financial results for its fiscal second quarter ended Aug. 3.

However, no clear trend immediately emerged, and most of the trading consisted of smallish odd-lot transactions.

A market source said that Penney's 5¾% notes due 2018 had pushed up to 77¾ bid at mid-morning on volume of over $1 million - up solidly from their Monday closing level just below 76, but more in line with the issue's previous round-lot levels in the mid-77 range.

Its 7.40% bonds due 2037 likewise jumped to 68¼ bid on volume of over $1 million, from Monday's close in the mid-66s, but that was only a slight gain from prior large-sized trades around 68.

The company's 5.65% notes due 2020 traded at 75 bid, well up from around 72 5/8 on Monday, but only on smallish trades, with no size trades immediately seen.

Penney's New York Stock Exchange-traded shares had lost 12 cents, or 0.91%, at 10:45 a.m. ET to stand at $13.10. Volume of over 14 million shares was running about 20% above normal.

Penney - trying to turn itself around after quarters of sagging sales and changing management - reported that net sales fell to $2.66 billion from $3.02 billion in the year-earlier fiscal second quarter, with comparable store sales at outlets open at least one year - a key retailing industry performance metric - down 11.9% in the quarter from a year ago. Analysts were looking for around a 7.5% decline.

It said that sales "were negatively impacted by the company's failed prior merchandising and promotional strategies, which resulted in unusually high markdowns and clearance levels in the second quarter."

However, it said that comparable-store sales had improved sequentially by 470 basis points versus the first quarter of fiscal 2013, which ended in early May. Additionally, it said that sales results had improved sequentially each month within the second quarter, "a trend the company expects to continue through the back half of the year."

It posted a net loss for the quarter of $586 million, or $2.66 per share, and an adjusted net loss of $477 million, or $2.16 per share.

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