J.C. Penney Profit Soars

PLANO, TX-Profit soared to $172 million in the first quarter at J.C. Penney Co. Inc., compared with $41 million in last year’s first quarter, an increase to 63 cents per share compared with 13 cents per share, the retailer reported Tuesday while outlining store expansion as well as long-term strategies and posting comparable store sales increases for the eighth consecutive quarter. The year-to-year earnings comparison was helped this year by a one-time event last year, a $77 million charge for discontinued operations of Eckerd drug stores that walloped the quarterly profit. Before the charge for discontinued operations in last year’s first quarter, income from continuing operations was $118 million, or 38 cents a share.

The strong results for the first quarter ended April 30 reflected “a positive reaction to our spring merchandise assortments” and is evidence that the “moderate customer” Penney has targeted “is responding to the style, quality, selection and value” and to other efforts by the chain, according to Ken Hicks, Penney’s president and chief merchandising officer. Hicks delivered his comments during the company’s conference call with financial analysts, in which he reported that Penney’s department store comparable store sales rose 3%, an achievement that followed last year’s 9.5% comp increase in the first quarter. Total sales rose to nearly $4.2 billion from $4 billion in last year’s comparable quarter.

Hicks said J.C. Penney plans to open 19 new stores in 2005, 12 of which will be in the chain’s new off-mall format. The company opened three of this year’s 19 stores in the first quarter and two more in the second quarter in early May, leaving the majority “planned for the third quarter in time for the holiday season,” Hicks said. The Penney exec outlined the company’s recently announced long-term strategy for the years 2005 to 2009, which consists of four components: making an emotional connection with the customer by offering compelling merchandised including private brands; making J.C. Penney an easy and exciting place to shop through things like the chain’s new POS system which interconnects catalog, stores and Internet; making J.C. Penney a leader in performance and execution by improving operational efficiencies; achieving all three of these goals through the fourth element of the strategy, which is “making Penney a great place to work.” The strategy is designed to achieve Penney’s stated goal of becoming “the preferred shopping choice for middle America.”

As of April 30, J.C. Penney Corp. operated 1,017 J.C. Penney department stores throughout the United States and Puerto Rico, and 62 Renner department stores in Brazil. The company also sells its merchandise via catalog and e-commerce operations.