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JCPenney posts 2Q loss of $16 million

Don Hogsett -- Home Textiles Today, August 20, 2001

PLANO, TX — With margins thinning out and sales virtually unchanged, retail giant J.C. Penney recorded a $16 million loss, compared with a year-ago profit of $23 million.

Sales were virtually flat, inching up just 0.1 percent, to $7.2 billion, with gains in the Eckerd drugstore business offsetting a 5.4 percent decline in department stores and catalog.

Despite the sales drop in the core department store and catalog operation, there were signs the business is headed toward a turnaround and finally gaining some traction in a particularly tricky retail environment. The crucial gauge of same-store sales climbed by 2.3 percent in department stores, reversing a year-ago decline of 1.5 percent.

Allen Questrom, chairman and ceo, said, results "provide some encouraging signs. Department stores had its second consecutive quarterly comparable-store sales gain, reflecting improved merchandise assortments and a more effective marketing message."

Catalog performance, he noted, declined, as expected. "Our new catalog management team is developing the business strategies that are expected to improve operating performance."

Questrom said earnings are expected to come in at 10 cents to 15 cents per share, leading to 30 cents to 35 cents in per share profits for all of 2001.

J.C. Penney Inc.

Qtr. 7/28 (x000) 2001 2000 % CHG
(loss) a-Second-quarter results include acquisition amortization; a $7 million restructuring charge, compared with a $25 million credit last year; a $53 million loss form continuing operations vs. a $19 million year-ago loss; and a $16 million loss from discontinued operations, compared with a year-before profit of $42 Million. b-Six-month results include a $56 million charge for acquisition amortization, compared with $58 million in 2000; $12 million in restructuring charges vs. $207 million; a $12 million loss form continuing operations, compared with a $175 million year-ago loss; and a $16 million loss from discontinued operations vs. a prior-year profit of $80 million.
Sales $7,211,000 $7,207,000 0.1
Oper. income (EBIT 47,000 81,000 -42.0
Net income (69,000)a (28,000)a
Per share (diluted) (0.23) (0.10)
Average gross margin 28.2% 29.2%
SG&A expenses 27.6% 28.1%
Six months
Sales 14,733,000 14,735,000 0.0
Oper. income (EBIT) 236,000 218,000 8.3
Net income (28,000)b (95,000)b
Per share (diluted) (0.10) (0.73)

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