Marvin Ellison at J.C. Penney in Queens, N.Y.

J.C. Penney Co. Inc. bit the bullet, liquidated slow moving apparel in the third quarter and took a hit to the bottom line as it seeks to put more money behind its more promising merchandise categories.

The warning sent the retailer’s shares reeling 25 percent, to $2.75 in, pre-market trading and 21.6 percent once the market open. It also dragged down other retailers as well. Macy’s Inc. shares were down 4.7 percent to $20.35 and Kohl’s Corp. stock dropped 4.8 percent to $42.50.

Penney said third-quarter comparable store sales would increase by 0.6 percent to 0.8 percent, but that the cost of goods sold would also rise 300 to 320 basis points, leading to adjusted losses per share of 40 cents to 45 cents.

That led to a forecast for the full year of adjusted earnings per share of 2 cents to 8 cents, well below the 40 cents to 65 cents previously projected.

The company also said it took steps to combine its pricing and planning teams under its chief financial officer in order to streamline its its pricing, promotion and markdown strategies.

Chairman and chief executive officer Marvin Ellison said, “With a sharper and more disciplined focus on inventory management, we are taking a comprehensive approach to assessing the effectiveness of our inventory positions to make swift, informed decisions that promote faster inventory turn and higher productivity levels.

“Although these actions will create a short-term negative impact to cost of goods sold and earnings, long term, we firmly believe it was the right decision for the Company as we transition into the fourth quarter and fiscal 2018,” the ceo said. “In addition, based on the way our business is growing, including continued comp sales growth penetration in major appliances and omnichannel in the third quarter, we are taking a renewed approach to aligning our expense structure to match the mix of our growth initiatives.”

The company will give more details on its plans when it releases earnings on Nov. 10.

Investors are growing increasingly wary of J.C. Penney, which is carrying $4.3 billion in debt and has been working to find the right merchandise mix for consumers.

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