JC Penney ekes out small profit in 4th quarter
Wednesday, February 26, 2014
NEW YORK (AP) — J.C. Penney's turnaround seems to be getting some legs.
The department store retailer swung to a small profit in the fourth quarter from a massive loss a year ago, and reported its first quarterly gain in a key revenue figure in more than two years.
The company also had positive news going forward: Penney said it expects that revenue at stores open at least a year, the key revenue measurement, will increase 3 to 5 percent in the current quarter.
Investors were encouraged by the results, pushing shares up nearly 5 percent, or 29 cents, to $6.25 per share in aftermarket trading when the results were announced. Shares had risen close to 6 percent to $5.96 during regular trading, but they're down 35 percent so far this year.
The results, which cover the crucial holiday shopping season, offer hopeful signs that Penney is making strides in recovering from a botched transformation plan by its former CEO, Ron Johnson that resulted in massive losses and plunging sales. Johnson, the mastermind behind Apple's retail concept, was ousted last April after 17 months on the job, and the board rehired Mike Ullman who had previously been at the helm for seven years.
Ullman is trying to win back shoppers by restoring the sales events and basic merchandise that the company ditched under Johnson in a bid to attract younger, wealthier consumers. That meant doing things like discontinuing brands like William Rast and Joe by Joseph Abboud that were brought in by Johnson and increasing markdowns to get rid of the excess inventory.
The company also has been taking some cost-cutting measures. Earlier last month, Penney announced it would cut 2,000 jobs and shutter 33 stores as it attempts to get back on the path of profitability.
"The most challenging and expensive parts of the turnaround are behind us, and the work we did in 2013 has laid the foundation of continued progress in 2014," Ullman told investors during a call on Wednesday.
But he acknowledged there's more work to do, such as increasing sales and profit margins, while continuing to manage expenses.
Penney said Wednesday that it earned $35 million, or 11 cents per share, in the three-month period ended Feb. 1. That compares with a massive loss of $552 million, or $2.51 per share, in the year-ago period.
Revenue slipped 2.6 percent to $3.78 billion.
Excluding a tax benefit and other items, Penney had a loss of $206 million, or 68 cents per share, in the quarter. Analysts had expected a loss of 81 cents on revenue of $3.84 billion.
The company said revenue at stores opened at least a year was up 2 percent in the fourth quarter. That's compared with a 31.7 percent plunge for that measure for the holiday quarter a year ago.
In the latest year, Penney recorded a loss of $1.39 billion or $5.57 per share, while revenue dropped 8.7 percent to $11.86 billion as Johnson's legacy continues to cast a shadow on its results.
Penney recorded a nearly $1 billion loss as revenue dropped 25 percent to $12.9 billion for the year that ended Feb. 2, 2013, the company's first year of Johnson's failed transformation plan.
It reiterated that it ended the latest fiscal year with more than $2 billion in total available liquidity.
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