24/7 Wall St.

Whatever magic J.C. Penney (NYSE: JCP) CEO Ron Johnson brought with him when he moved to the aged retailer from the top store manager’s job at Apple (NASDAQ: AAPL) is gone. Actually, Wall St. figured there was a problem some time ago, as shares have sold down to pre-Johnson levels. Based on Penney’s earnings, his chance to maintain the illusion that the company can be turned around is over.

Penney shares fell 14% after hours to $28.25, as the company posted awful earnings. Johnson has not learned to admit problems in the face of bad news. His comment about the quarter was this: “Sales and profitability have been tougher than anticipated during the first 13 weeks, but the transformation is ahead of schedule. Customers love the new jcp they discover in our stores”. He is fortunate that his job does not rely on his judgement, at least for now.

Proof that Penney has actually lost ground:

Comparable store sales for the first quarter declined 18.9 percent. Total sales decreased 20.1 percent, which includes the effects of the Company’s exit from its outlet business. Internet sales through jcp.com were $271 million in the first quarter, decreasing 27.9 percent from last year.

The P&L for the quarter showed revenue down 20% to $3.152 billion. The company lost $163 million. EPS went from $.28 last year to a loss of $.75. The retailer also suspended its dividend

Penney was dead before Johnson came. The quarter’s numbers are more proof of it.

Douglas A. McIntyre