Feb 22, 2007 2:17 pm US/Central
Profit Falls At Plano's JC Penney
PLANO (AP) ―
Department store operator J.C. Penney Co. said Thursday its fourth-quarter profit fell 13 percent partly due to higher taxes, and it predicted a weaker first quarter than Wall Street expected.
"We're seeing February being soft," said Chairman and Chief Executive Myron E. Ullman III. But he said sales would rebound with new spring fashions, and the company stuck with a bullish outlook for the next 12 months.
Penney shares fell $3.15, or 3.7 percent, to $83.20 in midday trading on the New York Stock Exchange.
Net income for the three months ended Feb. 3 fell to $477 million, or $2.09 per share, from $551 million, or $2.34 per share, a year earlier. Earnings from continuing operations totaled $2 per share compared with $1.92 per share a year ago.
Analysts surveyed by Thomson Financial expected adjusted earnings of $1.97 a share.
Revenue grew 7 percent to $6.66 billion, slightly higher than $6.20 billion a year ago and the analysts' forecast of $6.64 billion.
Same-store sales, or sales in stores open at least one year, a key measure for retailers, grew 2.2 percent in the quarter. Children's apparel, fine jewelry and family shoes sold well, while home furnishings didn't.
On the cost side, income taxes jumped 51 percent to $271 million. Officials said they got benefits a year ago, when the income-tax bill was $179 million, that weren't repeated. Capital expenses also rose as Penney opened new stores, and will rise sharply in 2007.
Penney, which went through a dramatic turnaround earlier this decade, continued to boost sales by both building private-label brands and adding goods from famous designers.
The private brands are highly profitable and growing faster than national ones. They accounted for 45 percent of Penney's sales last year, up from about 40 percent.
Meanwhile, Ullman continues to add lines from designers such as Liz Claiborne and Ralph Lauren to draw shoppers who once shunned Penney stores. The company recently opened upscale Sephora cosmetics counters inside five stores and plans to add them in 19 more stores by midsummer.
Penney predicted that operating profit will be flat in the first quarter but improve modestly over the next 12 months. The company said net income of 99 cents per share for the first quarter -- below analysts' forecast of $1.05 per share.
Ullman said same-store sales might even fall during a weak February period but would soon rebound. The company expects same-store sales to rise by low single digits in the February-April quarter and the next 12 months.
For the full fiscal year that ends next February, Penney predicted it will earn $5.44 per share, slightly above Wall Street's forecast of $5.42 per share.
In the fiscal year that just ended, Penney earned $1.15 billion, or $4.96 per share. That's up 6 percent from $1.09 billion, or $4.26 per share the year before. Revenue also grew 6 percent, to $19.90 billion from $18.78 billion.
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