But Wall Street brushed off the news after the company, which last month brought back ex-CEO Myron Ullman to turn around its operations, reported cash levels that implied the department store chain had gone through less money than feared. Vendors and analysts expect sales to improve later this year.
Shares rose 1.6 percent to $16.66 in after-hours trading.
Penney, coming off a 25 percent sales plunge in 2012 largely blamed on former CEO Ron Johnson’s strategy of eliminating coupons and sales in favor of everyday lower prices, reported that same-store sales, or sales at stores open at least a year, fell 16.6 percent in the first quarter.
Analysts were expecting a drop of 13.2 percent, according to Thomson Reuters I/B/E/S.
Johnson was ousted last month and Ullman, whom he replaced in late 2011, has increased the pace of sales in the last two weeks and overseen an apologetic ad campaign aimed at winning back shoppers.
Penney reported quarterly sales of $2.64 billion, below the $2.74 billion Wall Street was expecting, according to Thomson Reuters I/B/E/S.
Some of the decline stemmed from a renovation at the home goods section at 500 of Penney’s larger stores ahead of a re-opening this spring with brands by designers such as Jonathan Adler and Martha Stewart.
“This is all on Ron Johnson’s dime,” said Bernard Sosnick of Gilford Securities Inc about the first quarter results.
Penney will report full quarterly results May 16. Wall Street is more concerned about whether sales are improving now that the company has brought back some of its most popular private brands and old pricing strategy that included coupons and discounts, said Sosnick.
There is a sense among analysts and Penney vendors that sales are already improving since Penney brought back private brands like St. John’s Bay clothing and a more aggressive promotion and discounting schedule, including using clear language like “sale” and “25 percent off.”