By Melissa Fares and Nivedita Balu
(Reuters) - J.C. Penney Co Inc on Thursday projected a bigger comparable sales fall than market expectations for 2020, even after reporting better-than-expected results for the holiday quarter on strength of its women's apparel business.
Shares of the 117-year-old department store chain, which have lost 35% of their value this year, were down roughly 7% in morning trading.
Plano, Texas-based Penney has struggled for years to excite consumers with its mid-priced range of apparel, and has lost a lot of shoppers to online behemoths like Amazon.com Inc and off-price retailers like TJX Cos Inc as it reworks its business strategy.
Under Chief Executive Officer Jill Soltau, Penney has shut unprofitable stores, ditched selling major appliances last year to sharpen its focus on more profitable apparel sales, and is testing a new store model that includes a yoga studio, a videogame lounge and lifestyle workshops.
Penney expects to close at least six store locations in 2020, it said.
The retailer has also partnered with resale clothing company thredUP and relaunched its a.n.a brand with new all-inclusive sizes of jeans, fits and fabrics to appeal to younger consumers.
"We are beginning to see results," CEO Soltau said. "Women's apparel had a sequential improvement from the third to fourth quarter."
Along with women's apparel and accessories, footwear and home were among the categories that saw the most improvement in the reported quarter, the company said.
However, the company also said it expects comparable sales in fiscal 2020 to fall between 3.5% and 4.5%, much more than the Wall Street estimate of a 1.22% drop.
Soltau reassured investors on a post-earnings conference call that increased investments being made in services like curbside pickup and buy-online-pickup-in-store will help the company boost sales and revive profits.
Sales at stores open for more than a year fell 7% in the quarter ended Feb. 1 compared with expectations of a 7.3% slide, according to data from IBES Refinitiv.
Revenue fell 7.7% to $3.49 billion, slightly above expectations of $3.44 billion.
Net income fell to $27 million, or 8 cents per share, from $75 million, or 24 cents per share, a year earlier. On an adjusted basis, it earned 13 cents in the quarter, surpassing the estimate of a 6 cent loss.
Hilding Anderson, head of retail strategy at consulting firm Publicis Sapient, called Penney's quarter a "step in the right direction," highlighting its success in apparel and decreasing inventory costs.
"But real and lasting transformation will come when they can report an increase in revenues and profit year over year," he said.
(Reporting by Nivedita Balu in Bengaluru and Melissa Fares in New York; Editing by Arun Koyyur and Steve Orlofsky)