Penney Q2 breaks even

Don Hogsett, August 18, 2003

Helped by a continuing rebound in its department store and catalog business, J.C. Penney Co. recorded a break-even second quarter, improving on a year-ago loss of $6 million.

Importantly, operating profits in the core retailing business more than doubled, jumping up by 131.8 percent, to $51 million from $22 million last year.

Extending a long-running turnaround, same-store sales in the core department store business grew by 2.1 percent, reversing a year-ago decline of 2.4 percent; and catalog and internet sales grew at an even faster pace, rising by 3.9 percent. All merchandise divisions recorded same-store sales increases during the quarter.

Stronger sales in the core retailing business helped to offset weakness in the Eckerd Drugstore segment, where sales increased a relatively anemic pace of 2.3 percent, well of their usual pace. Eckerd's operating profits slumped by 26.0 percent, to $54 million from $73 million last year.

Giving the department store and catalog profits a much needed lift, in addition to the stronger sales, margins held relatively steady, while costs were whittled down. Average gross margin dipped slightly, by 20 basis points, or two-tenths of a percentage point, to 35.9 percent from 36.1 percent a year ago. But more than offsetting the margin slipping, operating costs improved by 100 basis points, to 34.5 percent of sales from 35.5 percent the prior year.

"As we begin the second half, we anticipate benefits from a more favorable consumer environment supported by the positive impacts that the tax package will have on our customers," said Allen Questrom, chairman and ceo. "We believe our department store and catalog/internet business will continue to improve in the second half, beginning with the Back-to-School selling season."

Second quarter segment results

DEPT. STORE/CATALOG 2003 2002 % change
Sales $3,658,000 $3,623,000 1.0%
Same-store sales 2.1% -2.4%
Oper. income 51,000 22,000 131.8
Average gross margin 35.9% 36.1%
SG&A expenses 34.5% 35.5%
ECKERD DRUGSTORES
Sales $3,655,000 $3,575,000 2.3%
Same-store sales -0.8% 6.1%
Oper. income 54,000 73,000 -26.0
Average gross margin 23.1% 23.4%
SG&A expenses 21.3% 21.1%


J.C. Penney Co. Inc.

Qtr. 7/26 (x000) 2003 2002 % change
(loss)
a-Second-quarter results include miscellaneous income of $11 million, compared with a year-ago miscellaneous expense of $5 million; and acquisition amortization of $8 million. Compared with $7 million last year; the company incurred no income-tax expense, compared with a $3 million 3 million income-tax provision a year ago.
b- Six-month results include $18 million in miscellaneous income vs. a year-before miscellaneous expense of $15 million; and acquisition amortization of $18 million vs. $17 million a year ago.
Sales $7,313,000 $7,198,000 1.6
Oper. income (EBIT) 105,000 95,000 10.5
Net income 0,000a (6,000)a
Per share (diluted) (0.02) (0.05)
Average gross margin 29.4% 29.7%
SG&A expenses 27.9% 28.3%
Six months
Sales 14,806,000 14,926,000 -0.8
Oper. income (EBIT) 306,000 352,000 -13.1
Net income 61,000b 80,000b -23.8
Per share (diluted) 0.18 0.24 -25.0
Average gross margin 30.2% 30.1%
SG&A expenses 28.1% 27.7%


Featured Video

  • Live From New York: Fashion Comes Across the Pond

    Camera Icon More Videos

Subscribe to
Home & Textiles Today eDaily
Receive the news you need to know about the trends in the industry delivered right to your inbox.

CURRENT ISSUE

HTT Cover October 2017

See the October 2017 issue of Home & Textiles Today. In this issue, we look at the Top 25 Online Retailers.  H&TT's exclusive annual ranking of the biggest online sellers of home textiles finds that while pure play etailers continue to fly, bricks & clicks are digging into omnichannel. See details!