JCP's apparel segment gets good response during Q3
17 Nov '11
4 min read
J. C. Penney Company Inc. reported that adjusted net income excluding restructuring and management transition charges for the third quarter ended October 29, 2011, was $24 million or $0.11 per share. Including restructuring and management transition charges, the Company reported a net loss of $143 million or $0.67 per share.
Executive Chairman Myron E. (Mike) Ullman, III, said, "While our more affluent customers continued to respond well to jcpenney's attractions, the moderate customer continues to have limited discretionary spending capability, and that was apparent during the quarter. However, the combination of customer response to the style and value we offer in categories such as women's and men's apparel and accessories, coupled with the expense reduction initiatives we put in place over the course of 2011, allowed us to report results in line with our expectations.
"As we look to the holidays, jcpenney has an exciting marketing plan in place to showcase our wide range of great gifts available in stores. As our associates devote themselves to ensuring that our customers can make the holidays enjoyable and memorable for their families, our new CEO Ron Johnson and the leadership team are developing strategies for the next phase of jcpenney's transformation. This next chapter will be exciting and rewarding for our customers, associates and shareholders."
Third Quarter Performance Comparable store sales for the third quarter declined 1.6 percent. Total sales decreased 4.8 percent, reflecting the Company's exit from its catalog and catalog outlet businesses. As previously announced, the Company completed the sale of its outlet store business during the quarter. Internet sales through jcp's website. were $341 million in the third quarter, decreasing 5.4 percent from last year. The strongest merchandise results in the period were in women's accessories and men's apparel. Geographically, the best performance was in the southeast region of the country.
Gross margin decreased $146 million compared to last year's third quarter. As a percent of sales, gross margin decreased approximately 160 basis points to 37.4 percent, reflecting the softer-than-anticipated selling environment in the quarter and the resulting higher level of promotional activity.
Overall, SG&A expenses were well-managed during the quarter and decreased $84 million, or 6.3 percent, versus last year. The savings generated in the third quarter were due primarily to lower marketing expenses and lower credit costs. As a percent of sales, SG&A expenses decreased 50 basis points to 31.2 percent.
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