Home still hurting at JCPenney
November 14, 2011,
During today's third quarter conference call, executive chairman Mike Ullman quoted business magnet Warren Buffet, who in a television interview this morning had said the U.S. housing market is in a depression, not a recession.
"This is a transition year," Ullman told investors. That is especially true for the company's online business, where home previously accounted for 55% of sales.
For the third quarter ended Oct. 29, Penney swung to a net loss of $143 million, or 67 cents per share as restructuring charges, including an early retirement program for long-term employees and the sale of the company's outlet business.
Absent the charges, net income was $24 million, or 11 cents per share, nearly half of last year's 3Q profit of $44 million, or 19 cents per share.
"While our more affluent customers continued to respond well to jcpenney's attractions, the moderate customer continues to have limited discretionary spending capability, and that was apparent during the quarter," said Ullman.
Softer sales and stepped up promotions lopped 160 basis points off gross margin, which came in a 37.4% of sales.
Total sales fell 4.8% to $3.986 billion, with comps down 1.6%.
Internet sales decline 5.4% to $341 million. Women's accessories and men's apparel were the strongest performers online.
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