FILE - In this Nov. 25, 2011 file photo, Rosio Guerrero, left, shops at the JC Penney, in Phoenix, Ariz. J.C. Penney Co. said Friday, Feb. 24, 2012, it posted a loss in the fourth-quarter as results were dragged down by restructuring and management transition charges as well as the financial impact related to its new pricing strategy. (AP/Photo/The Arizona Republic, Tom Tingle, File) MARICOPA COUNTY, NO SALES
FILE - In this Nov. 25, 2011 file photo, Rosio Guerrero, left, shops at the JC Penney, in Phoenix, Ariz. J.C. Penney Co. said Friday, Feb. 24, 2012, it posted a loss in the fourth-quarter as results were dragged down by restructuring and management transition charges as well as the financial impact related to its new pricing strategy. (AP/Photo/The Arizona Republic, Tom Tingle, File) MARICOPA COUNTY, NO SALES
NEW YORK (AP) ? J.C. Penney Co. reported a loss of $87 million in the fourth-quarter, citing restructuring and management transition charges as well as the financial impact of preparing for its new pricing strategy.
"While 2011 was a year of transition at J.C. Penney, 2012 will be a year of transformation," CEO Ron Johnson, a former Apple executive, said in a statement. He joined the board last August and became CEO in November.
But he has moved quickly to shake up a company that has been a laggard in the department store sector. It is transforming everything from its simplified pricing approach to what it keeps in stock.
With its new pricing plan that debuted shortly after the end of the fourth quarter, the company is embracing a three-tier strategy: everyday prices that are about 40 percent less than initial prices of a year ago, deeper promotions that last a month and clearance events the first and third Friday of each month.
The company also is changing its assortment of brands and the store experience. It announced in December that it will develop mini-shops in its stores with homemaking doyenne Martha Stewart. During an investor meeting in mid-February, it also outlined plans to add 80 to 100 other brand shops inside its stores to replace the sea of clothing racks typical of department stores. It also plans spots in its stores called Town Squares, like Apple's Genius Bars, that will offer services and advice. Investors will want to know what other brands Penney hopes to add.
The department store chain said Friday that its loss amounted to 41 cents per share for the three-month period ended Jan. 28. That compares with net income of $271 million, or $1.13 per share in the year-ago period.
The results include restructuring and management charges that totaled 56 cents per share. The impact of its pricing strategy, which debuted Feb. 1, lowered results by an additional 59 cents. Excluding those charges, the company earned 74 cents per share, which beat estimates for a profit of 68 cents per share, according to FactSet.
Revenue slipped 5 percent to $5.42 billion, reflecting the company's exit from its catalog business. Analysts expected $5.5 billion.
Its revenue at stores open at least a year fell 1.8 percent for the quarter.
Its shares fell 65 cents, or 1.6 percent, to $41.28 in premarket trading.
Penney faces a challenge in selling shoppers on its new pricing. For years, it followed the common retail practice of hiking its initial prices so shoppers feel like they're getting a great deal when items go on sale. Penney threw 590 sales events last year, and nearly three-quarters of its revenue came from merchandise discounted by half or more. In fact, this past holiday season, Penney was forced to heavily discount to get shoppers in. That helped to depress gross profit margins to 30.2 percent in the fourth-quarter, down from 37.6 percent in the year ago period.
The turnaround plan took a hit when Fitch Ratings dropped its rating this week on Penney's debt to the "speculative" range, better known as "junk." Fitch said it's not sure that shoppers will accept the pricing structure or that the company can lift sliding sales and improve profitability.
Penney has been a laggard among department stores as its core middle-income customers have been among those hit hardest by the weak economy. It's also failed to attract younger customers even adding hip brands like Mary-Kate and Ashley Olsen's teen clothing collection Olsenboye.
Johnson has tapped former colleagues at Apple and Target to join Penney, including former Target marketing executive Michael Francis as Penney's president.
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