J.C. Penney reports Q2 loss of $586 million

Hadley Malcolm | USA TODAY

J.C. Penney is still struggling to recover from a failed merchandise strategy and store overhaul by former CEO Ron Johnson.

The company Tuesday reported a net loss of $586 million, or $2.66 a share, for its second quarter. That compares with a $147 million net loss, or 67 cents a share, a year ago.

Same-store sales were down about 12% from the second quarter of 2012. Penney said sales continue to be adversely affected by the "lengthy renovation and disappointing re-merchandising of its home departments."

Revenue for the quarter was $2.66 billion, compared to $3.02 billion for the second quarter last year.

"There are no quick fixes to correct the errors of the past," interim CEO Mike Ullman said in statement. "Moving forward, we're focusing our efforts on regaining customer loyalty by offering trusted brands, award winning service and affordability that families can depend on."

Earlier this month, Penney lost one of its most prominent board members when Bill Ackman resigned. Ackman's Pershing Square Capital Management is Penney's largest stockholder. His resignation came after the investor made public statements about losing confidence in the retailer's board.

Penney still has to find a permanent CEO replacement for Ron Johnson, who was ousted in the spring. Ullman, who served as Penney's CEO from 2004 to 2011, was brought in to lead the company in the meantime.

During Johnson's tenure, he eliminated deep markdowns and launched a plan to redesign stores around exclusive brand partnerships. The pricing strategy confused customers and the chain suffered. Ullman was frank in a conference call Tuesday, acknowledging that "we aren't where we need to be yet," and that it was "no secret" that the company's merchandising strategy wasn't working.

Penney said the early weeks of the back to school shopping period were "encouraging."

It ended the quarter with about $1.5 billion in cash, which included the proceeds of a $2.1 billion loan it received during the period. Penney said it expects to end the year with $1.5 billion in overall liquidity.

Shares rose 79 cents, or 6%, to close Tuesday at $14.01.