1st-quarter profit halved, Penney says
Posted on Friday, May 16, 2008
J. C. Penney reported Thursday that first-quarter profits were halved and predicted “difficult” conditions for the entire year as consumers pull back on spending.
Net income fell to $ 120 million, or 54 cents per share, from $ 238 million, or $ 1. 04 per share, a year ago, the suburban Dallasbased retailer said.
Total sales fell 5 percent to $ 4. 13 billion from $ 4. 35 billion.
Profits per share were better than the 50 cents expected from analysts surveyed by Thomson Financial, however, and it said second-quarter earnings would be slightly better than analyst forecasts.
Shares rose $ 2. 07, or 4. 7 percent, to close at $ 46. 32 on Thursday. Kohl’s Corp. and luxury retailer Nordstrom also reported declining profits. “It is obviously a very difficult time for all U. S. consumers,” said Myron E. Ullman III, J. C. Penney’s chairman and chief executive. “They’re facing uncertainty in their financial well-being.”
In April, the retailer released details from its strategy to ride out a tough period for the entire sector.
J. C. Penney said it would reduce store openings and renovation plans, while trying to cut expenses. Ullman said the company also was focused on inventory management, with plans for levels lower than a year ago after the back-to-school season. He said future merchandising commitments also were being reduced.
“We’re planning conservatively for the future,” Ullman told analysts.
During the first quarter, total sales decreased 5. 1 percent. Sales at stores open at least one year fell 7. 4 percent, but were at the top end of the company’s revised guidance for a high-single digit decrease. Same-store sales are considered a key indicator of a retailer’s health.
The company said it expects same-store sales to drop in the mid-single digits in the second quarter.
The best-performing stores were in the northeast and central regions. Internet sales increased 8. 7 percent on top of an 18 percent increase in last year’s first quarter.
J. C. Penney said recently launched products have been well-received by customers, including the Sephora line of cosmetics and the American Living brand. The American Living brand spans from home furnishings to luggage in what is expected to grow into a $ 1 billion component annually.
“We recognize that it is more critical than ever to provide merchandise innovation, smart prices and a great shopping experience that clearly differentiates us from the competition,” Ullman said.
The company predicted a low single-digit decrease in total sales for the second quarter, with earnings per share of about 38 cents.
Analysts were looking for earnings of about 37 cents per share in the second quarter.
Kohl’s said its first-quarter profit fell nearly 27 percent.
The Menomonee Falls, Wis.- based department store chain said Thursday it earned $ ™ million, or 49 cents per share, during the quarter that ended May 3. By comparison, Kohl’s earned $ 209 million, or 64 cents per share, during the same period a year ago.
Analysts surveyed by Thomson Financial, on average, expected earnings of 44 cents per share.
Sales rose 1. 5 percent in the quarter to $ 3. 6 billion. But samestore sales fell 6. 7 percent.
Kohl’s lowered its guidance for the year, saying it expects earnings to fall in a range of $ 2. 95 to $ 3. 15.
Nordstrom said Thursday that its profit fell 24 percent in the first quarter, as recession rumblings crimped even wealthier consumers’ shopping habits.
Nordstrom’s earnings fell to $ 119 million, or 54 cents per share, from $ 157 million, or 60 cents per share in the same three months last year.
Revenue slipped 4 percent to $ 1. 88 billion from $ 1. 95 billion a year ago.
Analysts had predicted Nordstrom would earn a slightly lower profit of 49 cents per share on slightly higher sales of $ 1. 9 billion, according to a Thomson Financial survey.
The company said same-store sales fell 6. 5 percent for the quarter, below the expected 3 percent to 5 percent drop.
Nordstrom said margins were lower than a year ago, hurt by merchandise markdowns.
For the current second quarter, Nordstrom forecast a profit of 65 cents to 70 cents per share. The midpoint of that range is less than Wall Street’s current view for 69 cents per share.
Nordstrom cut its earnings outlook for the full year to $ 2. 65 to $ 2. 89 per share, from an earlier forecast for $ 2. 75 to $ 2. 90 per share. Analysts are currently looking for $ 2. 76 per share.
The retailer said it expects same-store sales to fall 5 percent to 7 percent in the quarter, and 4 percent to 6 percent in the year, a steeper drop than previously expected.
Nordstrom opened four new stores in the first three months of the year. Information for this article was contributed by Jessica Mintz, Emily Fredrix and Jennifer Malloy with The Associated Press.
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