Penney reports 5.2 percent profit drop in 4Q
J.C. Penney Co. reported a 5.2 percent decline in fourth-quarter earnings, dragged down by a big expense for its pension plan, but the profit topped its own expectations.
The merchant said sales slipped 3.6 percent to $5.5 billion as shoppers continue to focus on necessities in a tough economy.
By reducing inventory for the holiday quarter and sticking to planned promotions, the company boosted its gross profit margin from a year ago, Chairman and CEO Myron Ullman III said in a statement.
Penney expects 2010 to be a better year, forecasting sales and profit increases.
The department store operator said Friday that net income was $200 million, or 84 cents per share, in the period ended Jan. 30. That compares with $211 million, or 95 cents per share, in last year’s fourth quarter.
Excluding the pension expense, the company earned $1.02 per share.
Sales at stores open at least a year fell 4.5 percent. That’s a key measure of retailer health because it excludes the effects of new stores.
The merchant said total sales reached $5.5 billion. Analysts surveyed by Thomson Reuters expected 82 cents per share on $5.5 billion in the period.
Penney said that for the current year, it expects that sales at stores open at least a year to increase in the low single digits. The company also estimated that earnings per share will be approximately $1.55 per share.
Department stores chains have been challenged as shoppers worry about job security and cope with tight credit, but some consumers are starting to spend a little more.
Penney and other retailers heading into the holiday seaon cut inventory and also worked with suppliers to offer attractive deals to consumers. As a result, Penny and other department stores were able to stick to planned promotions without having to resort to desperate discounting this past holiday season.
Penney has also expanded its assortment of exclusive brands, including a new line called Olsenboye, which made its debut this spring. The line is part of a partnership with actresses Mary-Kate and Ashley Olsen.
Starting this fall, Penney will be the only U.S. retailer to sell all the Liz Claiborne lines, except for the Isaac Mizrahi-designed Liz Claiborne new York brand, which goes to QVC