UPDATE: JC Penney 1Q Net Rises; Cautious About 2Q, Full-Year
May 14 2010 - 10:09AM
Dow Jones News
J.C. Penney Co. (JCP) said earnings more than doubled in its
first quarter, helped by lower pension-expense charges and an
uptick in sales, but the retailer took a guarded view of the rest
of the year.
J.C. Penney said during the first quarter just about all of its
merchandise categories showed improvement from a year ago, with
men's and children's merchandise and shoes and handbags making the
greatest gains.
"We know that our customers remain concerned about their
budgets, however they respond well to merchandise that's new and
trend-right at compelling prices," Chief Executive Myron Ullman
said.
J.C. Penney's results follow those earlier in the week by fellow
department stores Macy's Inc. (M) and Kohl's Corp. (KSS), which
said they are seeing a pickup in demand from customers, but not a
return to robust buying.
J.C. Penney is striving to raise its market share by focusing on
exclusive brands, such as an expanded line by Liz Claiborne Inc.
(LIZ) that it will begin selling exclusively in the U.S. this fall.
The retailer is also aiming to improve its stores, put more
resources into its website and take a "disciplined approach" to
inventory and promotions.
For the quarter ended May 1, J.C. Penney reported a profit of
$60 million, or 25 cents a share, up from $25 million, or 11 cents
a share, a year earlier. The results met Wall Street's expectations
and were above J.C. Penney's own April guidance of 20 cents to 24
cents a share. Excluding items such as pension-plan expenses,
earnings from continuing operations rose to 40 cents from 34 cents,
J.C. Penney said.
Gross margin increased to 41.4% from 40.5% and same-store sales
rose 1.3%, while merchandise inventories were $3.2 billion at the
end of the first quarter, down a bit from a year ago.
The company last week reported that its total sales rose 1.2% to
$3.93 billion and same-store sales increased 1.3%. Sales rose in
six of seven merchandise divisions, with home goods the laggard.
The Southeast turned in the best sales performance
geographically.
J.C. Penney projected a second-quarter profit of 10 cents to 13
cents a share, with total sales growth of 2% to 2.5% and same-store
sales growth of 2.5% to 3%. Analysts polled by Thomson Reuters
projected earnings of 13 cents and 2% total-sales growth to $4.03
billion. The year's profit target was raised 9 cents from
February's view to $1.64, but is below Wall Street's expectation
for $1.65.
Shares fell 2.4% in early trading to $27.50.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
(Tess Stynes contributed to this article.)
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