US: JC Penney shares climb on swing to Q4 profit
- Q4 earnings of $35m
- Net sales drop to $3.78bn
- Net loss widens in FY
JC Penney said it had achieved what it set out to do in 2013
US department store retailer JC Penney saw its shares climb yesterday (27 February) as it revealed its first quarterly profit since July 2011.
The retail group said it had made "solid progress" despite a challenging retail environment in the quarter ended 1 February. Earnings amounted to US$35m compared to a net loss of $552m in the year ago period.
JC Penney also revealed an improvement in gross margin to 28.4% from 23.8 % last year.
Sales dropped to $3.78bn from $3.88bn in the comparable quarter of 2012, which included the additional 53rd week, while comparable store sales rose 2%.
Its full-year figures, however, revealed a widened net loss of $1.4bn from a loss of $985m a year earlier. Sales were down 8.5% to $11.9bn.
CEO Myron Ullman said JC Penney had achieved what it set out to do on a number of fronts in 2013.
"We stabilised our business, both financially and operationally, and restored our process disciplines, promotions, inventory levels and focus on the customer. With the most challenging and expensive parts of the turnaround behind us, we will focus on improving gross margin, managing expense and steadily growing our sales in 2014."
JC Penney has guided for full-year comparable store sales growth of 3% to 5 % and an improvement in gross margin. Full-year sales are expected to increase in the mid single digits.
Macquarie Capital analyst Liz Dunn said the quarter started out strong for JC Penney and ended softer, but added that it had made progress nonetheless.
"The core question for us is – what does the go forward look like? We believe the liquidity will support JCP’s continued work to turn the business. However, the heavy lifting to get back billions in lost sales and regain margins is still significant. We see FY16 as being a likely time for JCP to return to modest profitability."
The company's share price was up 5.86% to $5.86 at close of trading yesterday.
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