After reporting a weaker forecast and higher losses, JCPenney saw its shares fall more than 27 percent.
According to Reuters, the retailer’s shares fell below $2 for the first time on Thursday (Aug. 16) after it revealed that it expected its losses per share for the year to be between 80 cents and $1 – worse than a previous forecast, which ran from a loss of 7 cents to a profit of 13 cents. Analysts had expected a profit of 4 cents for the full year.
The company admitted that it had alienated its traditional customer base of women over the age of 45 by changing fashion lines to chase millennial buyers.
“We were no longer necessarily having the broad array of merchandise silhouettes that is most important for her (our core customer),” Chief Financial Officer Jeffrey Davis said on a post-earnings call.
“It is critical for us to better manage our inventory levels, and focus on … our core customers,” he added.
In an effort to get rid of excess inventory, the company heavily discounted seasonal merchandise, as well as its trendier fashions. That move led to a wider-than-expected loss in the second quarter. Revenue and same-stores sales also fell short of estimates.
“This flailing around is a symptom of a wider problem in that JCPenney no longer has a sense of what it wants to be or who it wants to serve,” GlobalData Retail’s Neil Saunders said.
JCPenney is one of many brick-and-mortar stores that has been struggling over the past few years as more consumers are turning to online marketplaces like Amazon to get their shopping done. Last year, H.H. Gregg Inc., Gordmans Stores and Gander Mountain Co. have entered bankruptcy. RadioShack filed for Chapter 11 for the second time in two years, while other companies like Sears, Macy’s and JCPenney have announced store closures outside of bankruptcy court.