* Penney Q1 same-store sales fall more than expected
* Macy's, Kohl's, Nordstrom also reported declines
* Market share shifts happening faster than expected-analyst
* All four companies back full-year comp sales forecasts
* Penney shares hit record low, rival's shares fall
(Adds Penney CEO and analyst comments, background; updates
By Sruthi Ramakrishnan
May 12 J.C. Penney Co Inc on Friday
rounded off another set of dismal earnings reports from
department store chains, highlighting their struggle to adjust
to the new normal for consumers: looking for better bargains and
J.C. Penney posted a steeper-than-expected drop in
same-store sales for the first quarter, mirroring reports from
Macy's Inc, Kohl's Corp and Nordstrom Inc
Penney's shares tumbled roughly 10 percent to a record low.
Nordstrom sank 9 percent. Macy's and Kohl's were off about 2
percent. Macy's was trading at its lowest since 2011.
Department stores have for years been struggling with
declining mall traffic as well as tough competition from online
retailers such as Amazon.com Inc and off-price stores
such as TJX Cos Inc.
"The surprise for everybody is that these market share
shifts are happening even faster than anyone else thought they
would," said Morningstar analyst Bridget Weishaar.
Adding to department stores' problems in the latest
February-April quarter was a delay in tax refunds in February
that crimped spending, while an unusually warm weather in the
same month hurt sales of winter wear.
Sales at Penney's stores open more than a year dropped 3.5
percent in the first quarter, much steeper than the 0.7 percent
fall estimated by analysts polled by research firm Consensus
The drop in apparel sales was bigger than the decline in the
company's overall comparable store sales and that will continue
through the year, Penney Chief Executive Marvin Ellison said.
"We have no great optimism that we're going to swing apparel
to positive comps overall."
To be sure, the weakness at brick-and-mortar retailers is
not indicative of a drop in consumer spending, but a change in
what people are spending on and how they shop.
U.S. Commerce Department data has shown that sales at online
retailers have outpaced sales at clothing stores almost every
month for some time now.
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
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.
Like its rivals, Penney has also sought to speed up its
supply chain and revamp how it replenishes stores. It is also
counting on a boost from its higher-margin private brands
But the company said that costs related to store closures
and severance packages led to its net loss more than doubling to
$180 million in the first quarter and will dent gross margins in
the current quarter.
"First quarter results undoubtedly represent a setback in
the company's recovery plans," Neil Saunders, managing director
of GlobalData Retail, said.
Penney, however, stood by its full-year same-store sales
forecast, as did Macy's, Kohl's and Nordstrom.
But while Penney said sales could range between a drop of 1
percent and a rise of 1 percent and Nordstrom said sales could
be flat at best, Macy's and Kohl's expect sales to decline.
"In general, the big takeaway is that the sector is in a
state of secular decline," Morningstar's Weishaar said.
"There are way too many stores out there that look exactly
like how they looked 30-40 years ago and that needs to change."
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by