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JCPenney cites home textiles in strong 2005 performance

Plano, Texas – Bedding and window were among the categories turning in a “noteworthy” performance during the fourth quarter, JCPenney executives said during an analysts call earlier today. Fourth-quarter operating profit grew to $655 million, up 14.5% over the same period a year ago. Comp store sales were up 2.6% while overall store sales grew 4.2%.

The coming four years will be focused on growth. This year, Penney will open 26 stores – all but six of them in off-the-mall formats, nearly doubling the off-the-mall store count by year-end to 42 units. Sales at off-the-mall properties are running $250 per sq. ft., according to Mike Ullman, chairman and ceo.

The impact from the upcoming sales at May Co. stores marked for elimination should cause “a short-term blip” as the market floods with clearance merchandise, said Ken Hicks, president and coo. Beyond that, Penney has a good opportunity to capture May’s moderate customer, he added.

Penney expects to pick up only a few of the closed May stores, said Ullman. He noted the company already operates stores in 70% of the markets where Federated is shuttering former May doors.

JCPenney had a very solid year in 2005: reporting on its financial and strategic results, the company said operating profit was up 22.5% to $1.58 billion, as gross margin gained by 5.5% to $7.4 billion. SGA edged up just 1.7% to $5.8 billion, while sales were up 3.8% to $18.8 billion. Comp store sales were up 2.9%, compared against a robust previous year comp gain of 4.9%.

The retailer opened 18 new stores, its biggest brick-and-mortar expansion in eight years. Along the way, annual online sales passed the $1 billion mark.

JCPenney expects to see 2006 sales climb in the “low- to mid-single digit” range; the comp store projection is low-single digits. The company will continue to emphasize its exclusive brands and licenses in both merchandising and marketing efforts.

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