Shares at J.C. Penney shares fell sharply on Friday after the retailer warned its third-quarter loss would be substantially worse than expected by the market. The key reason for such a weak quarterly performance lies in heavy discounting on its apparel lines.

Based on recent performance, J.C. Penney now expects a loss of between 40 cents to 45 cents a share for the quarter ending October 28. This comes well below analyst expectations for a loss of 18 cents a share and the 62 million dollars, or 20 cents a share the retailer posted the previous quarter.

The company lost 242 million dollars in the first six months of this fiscal year and posted 1 million dollars in profits last year.

“In the third quarter, we took the necessary steps to accelerate inventory liquidation primarily across all apparel divisions, which increases available funding to invest in new and trending merchandise categories,” CEO Marvin Ellison said in a news release.

The inventory liquidation “favorably impacted sales” during the months of September and October, he added, but “these actions will create a short-term negative impact to cost of goods sold and earnings.”

The retailer now anticipates third-quarter same-store sales to be up 0.6 percent to 0.8 percent and to be in the range of down 1 percent to flat for the full year. Cost of goods sold is projected to increase 300 to 320 basis points, according to a corporate release.

On the back of the news, the company’s stock shredded 14.75 percent to 3.12 dollars apiece, bringing the year-to-date decline to 62.4 percent.

The company also cut its full-year adjusted earnings forecast to 2 cents to 8 cents per share, from 40 cents to 65 cents.