Third quarter results reflect success of JCP Bridge Plan
J. C. Penney Company, Inc. reported fiscal third quarter results that were significantly better than initial expectations and showed further improvement in cash flow performance, reflecting the continued successful execution of its Bridge Plan strategy. The Company continues to be in a strong financial position, ending the quarter with a cash and cash equivalents balance of $2.1 billion. Based on the Company's better than expected year to date operating performance, as well as current expectations for the fourth quarter, management is raising its full year guidance for both comparable store sales and earnings per share.
Earnings per share for the third quarter ended Oct. 31, 2009, were $0.11, well above management's initial guidance for earnings per share to be in the range of a loss of $0.05 to earnings of $0.05. Income from continuing operations for this year's third quarter was $27 million. This year's third quarter includes a non-cash qualified pension plan expense of $73 million, or $0.19 per share after-tax. Excluding the impact of qualified pension plan expense, adjusted income from continuing operations was $72 million, or $0.30 per share. A reconciliation to the comparable GAAP measurement is included in this release. Third quarter earnings per share also reflect a $0.03 charge related primarily to non-recurring real estate impairments included in real estate and other expenses.
In last year's third quarter, earnings per share were $0.55, and income from continuing operations was $123 million. Last year's third quarter earnings included a qualified pension plan credit of $33 million, or $0.09 per share after-tax. Excluding the impact of the qualified pension plan credit from last year's third quarter results, adjusted income from continuing operations was $103 million, or $0.46 per share.
“JCPenney's third quarter results reflect the success of our strategy to balance top line performance with bottom line profitability,” said Myron E. (Mike) Ullman, III, chairman and chief executive officer of JCPenney. “Our ability to deliver earnings above original expectations resulted from better than expected improvement in gross margin as we have maintained appropriate inventory levels and reduced both clearance selling and unprofitable discounting. With continued investment in our Associates and our customer relationships, we are executing the right short-term and long-term strategies to maintain our financial strength and place us in a strong position for the future.
“We expect these strategies to be particularly effective in the fourth quarter. Our objective for this holiday season is to bring the 'Joy of Giving' to our customers. We will be stocking our stores with a merchandise assortment that includes great gifts offered at highly competitive prices. Combined with industry-leading customer service and a compelling promotional strategy, our customers will find the style, fashion, and quality that will once again make JCPenney the preferred destination during the holiday shopping season.”
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