J.C. Penney posts $31M gain in 3Q

With the rest of the retail economy in retreat, J.C. Penney Co. appears to be advancing. The company posted a $31 million third-quarter profit, compared with a $30 million loss from the third quarter of 2000.

Improvements in J.C. Penney's top line and expenses drove the retailer's performance in the third quarter. Its total retail sales increased just 2.5 percent, to more than $7.7 billion, but that rise included a strong 5.1 percent jump in its department stores' same-store sales during the quarter.

In addition, JCPenney continued to boost the entire corporation's profitability. Its operating margin increased by nearly 900 percent, to $178 million. Also, the company shaved 2.5 percent from its selling, general and administrative expenses; that and its sales improvement dropped 130 basis points from its SG&A ratio, to 27.2 percent in the quarter.

"Third-quarter results demonstrate that the company is continuing to make progress in its efforts to improve the profitability of its businesses," said Allen Questrom, JCPenney's chairman and ceo. "While the economic environment has become more challenging, we have maintained sales momentum and improved operating profits."

In the department store/ catalog area, JCPenney boosted both the top and the bottom line. Its cost-saving initiatives slimmed SG&A by 1.5 percent, and its expense reductions more than offset the higher level of planned advertising, the company said.

The department stores and catalog also reported sales gains in almost every merchandise category, but home furnishings was one of the areas that had the healthiest increase, along with women's and children's apparel. The company credited these gains to more fashionable assortments and more aggressive marketing programs.

An operating profit turnaround at JCPenney's Eckerd drug chain also contributed to the positive third quarter. Eckerd reversed a third-quarter operating loss from 2000 of $63 million, and turned in a $30 million operating gain in this year's third quarter. The drug chain also posted an 8.4 percent same-store sales increase in the quarter, on its way to an overall 7.4 percent pickup in its total sales.

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