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J. C. Penney unveils long-term financial outlook
27
Feb '12
J. C. Penney Company Inc announced fourth quarter results consistent with the Company's most recent guidance. For the fourth quarter ended Jan. 28, 2012, jcpenney reported a net loss of $87 million, or $0.41 per share.

As previously announced, this reported loss includes restructuring and management transition charges which totaled $0.56 per share, as well as the financial impact of actions taken to execute the Company's new pricing and promotional strategy, which lowered fourth quarter earnings by an additional $0.59 per share.

The Company took these strategic actions in the fourth quarter of 2011 to position jcpenney to begin operating under the new, simplified strategy on Feb. 1, 2012 – the first day of its transformation.

Ron Johnson, jcpenney's chief executive officer noted, "We closed the year by spending two days with the Company's key stakeholders to share our 'blueprint' for becoming America's favorite store. While 2011 was a year of transition at jcpenney, 2012 will be a year of transformation. With this in mind, our associate teams worked tirelessly throughout the quarter to get the stores ready for Feb. 1, 2012. I want to thank them for their amazing efforts."

Comparable store sales for the fourth quarter declined 1.8 percent. Total sales decreased 4.9 percent, reflecting the Company's previous exit from its catalog and catalog outlet businesses. Internet sales through jcp.com were $480 million in the fourth quarter, decreasing 3.1 percent from last year.

Gross margin decreased $506 million compared with last year's fourth quarter. As a percent of sales, gross margin in the fourth quarter decreased approximately 740 basis points to 30.2 percent, compared to 37.6 percent in the same period last year.

For the fourth quarter, the Company incurred $154 million in restructuring and management transition charges. These charges comprised the following:

• Management transition charges of $101 million or $0.41 per share;
• Expense reduction initiatives and other restructuring of $43 million, or $0.12 per share; and
• Supply chain consolidation of $10 million, or $0.03 per share.

Total operating expenses were 31.5 percent of sales for the quarter. The Company's operating loss for the fourth quarter totaled $73 million, which includes the financial impact of changes to the Company's pricing strategy and the restructuring and management transition charges discussed above, as well as $58 million of store impairment charges recorded in real estate and other.

For 2011, comparable store sales increased 0.2 percent. Total sales decreased 2.8 percent for the year. Internet sales through jcp.com remained essentially flat at $1.5 billion.

For the year, the Company's gross margin decreased $742 million from last year. As a percent of sales, gross margin decreased 320 basis points to 36.0 percent when compared to last year. For the year, SG&Adollars decreased $249 million or 4.6 percent.

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