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JCP's apparel segment gets good response during Q3
17 Nov '11
4 min read
For the third quarter, the Company incurred approximately $265 million in restructuring and management transition charges.
These charges comprised the following:
• Disposition of outlet business: approximately $30 million, or $0.09 per share;
• Voluntary early retirement program: approximately $179 million, or $0.51 pershare;
• Process Improvements in Supply Chain and Home Office: approximately $29 million, or $0.08 per share; and
• Management transition costs: approximately $27 million, or $0.10 per share.
Total operating expenses were 41.7 percent of sales for the quarter. The Company's operating loss for the third quarter totaled $171 million including the charges discussed above. Excluding restructuring and management transition charges, and the non-cash qualified pension plan expense of $22 million, adjusted operating income was $116 million for the quarter.
Financial Condition
The Company ended the third quarter with approximately $1.1 billion in cash and short-term investments on its balance sheet. Interest expense for the quarter was approximately the same as last year at $55 million. The Company ended the quarter with its inventory up 2.6 percent as compared to last year.
Outlook
The Company's 2011 fourth quarter guidance is as follows:
• Comparable store sales: expected to be flat to up slightly to last year;
• Total sales: expected to be approximately 250 to 300 basis points less than comparable store sales due to the impact of the Company's exit from its catalog and catalog outlet businesses;
• Gross margin rate:expected to be down modestly when compared to last year;
• SG&A expenses:expected to be well-managed and slightly below last year's levels;
• Restructuring and management transition charges:approximately $104 million;
• Average shares for EPS calculation: approximately 220 million common shares;
• Earnings per share: Including restructuring and management transition charges, earnings for the fourth quarter are expected to be in the range of $0.64 to $0.74 per share. Excluding these charges, earnings for the fourth quarter are expected to be in the range of $1.05 to $1.15 per share on a non-GAAP basis.
This guidance does not include the financial impact that is expected to be incurred in the fourth quarter as the Company executes changes to its pricing strategy in preparation for the spring 2012 season. The Company expects to disclose the financial impact of these changes with its fourth quarter results.
J. C. Penney Company Inc., one of America's leading retailers, operates over 1,100 jcpenney department stores throughout the United States and Puerto Rico, as well as one of the largest apparel and home furnishing sites on the Internet.
These charges comprised the following:
• Disposition of outlet business: approximately $30 million, or $0.09 per share;
• Voluntary early retirement program: approximately $179 million, or $0.51 pershare;
• Process Improvements in Supply Chain and Home Office: approximately $29 million, or $0.08 per share; and
• Management transition costs: approximately $27 million, or $0.10 per share.
Total operating expenses were 41.7 percent of sales for the quarter. The Company's operating loss for the third quarter totaled $171 million including the charges discussed above. Excluding restructuring and management transition charges, and the non-cash qualified pension plan expense of $22 million, adjusted operating income was $116 million for the quarter.
Financial Condition
The Company ended the third quarter with approximately $1.1 billion in cash and short-term investments on its balance sheet. Interest expense for the quarter was approximately the same as last year at $55 million. The Company ended the quarter with its inventory up 2.6 percent as compared to last year.
Outlook
The Company's 2011 fourth quarter guidance is as follows:
• Comparable store sales: expected to be flat to up slightly to last year;
• Total sales: expected to be approximately 250 to 300 basis points less than comparable store sales due to the impact of the Company's exit from its catalog and catalog outlet businesses;
• Gross margin rate:expected to be down modestly when compared to last year;
• SG&A expenses:expected to be well-managed and slightly below last year's levels;
• Restructuring and management transition charges:approximately $104 million;
• Average shares for EPS calculation: approximately 220 million common shares;
• Earnings per share: Including restructuring and management transition charges, earnings for the fourth quarter are expected to be in the range of $0.64 to $0.74 per share. Excluding these charges, earnings for the fourth quarter are expected to be in the range of $1.05 to $1.15 per share on a non-GAAP basis.
This guidance does not include the financial impact that is expected to be incurred in the fourth quarter as the Company executes changes to its pricing strategy in preparation for the spring 2012 season. The Company expects to disclose the financial impact of these changes with its fourth quarter results.
J. C. Penney Company Inc., one of America's leading retailers, operates over 1,100 jcpenney department stores throughout the United States and Puerto Rico, as well as one of the largest apparel and home furnishing sites on the Internet.
J. C. Penney Company Inc
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