Myron E. (Mike) Ullman, III, chief executive officer of jcpenney said, "Our objective is to put jcpenney back on a path to profitable growth. To achieve this, over the past five weeks we have taken critical steps to stabilize the business, including improving our balance sheet and ensuring we have our senior leadership in place.
"With that accomplished, together our team is focused on developing and executing strategies to enable us to reconnect with our customer and improve traffic and sales, while operating with strong financial discipline."
Ullman continued, "We are looking forward, not back, and undertaking initiatives to ensure we have a successful future. We are intensely focused on renewing customer excitement and loyalty through a combination of new attractions and long-beloved brands, with a promotional cadence that customers can appreciate and count on.
"There is a good deal of work ahead, but by listening to our customers and providing the shopping experience they want, we are confident we will deliver for them and improve performance for the benefit of our suppliers, associates and shareholders."
Total sales in the first quarter were $2.635 billion, a decrease of 16.4 percent from $3.152 billion in the same period last year. Comparable store sales decreased 16.6 percent for the quarter and were negatively impacted by the ongoing transformation of the home department.
For the quarter, gross margin was 30.8 percent of sales, compared to 37.6 percent in the same period last year. Gross margin was negatively impacted by lower than expected sales, a higher level of clearance merchandise sales and a return to some promotional activity towards the end of the quarter. SG&A expenses decreased $82 million compared to last year's first quarter.
As a percent of sales, SG&A expenses increased 410 basis points to 40.9 percent of sales. Total non-cash primary pension plan expense was $25 million. As a percent of sales, total operating expenses were 49.3 percent in the first quarter.
For the first quarter, the Company incurred $72 million in restructuring and management transition charges. These charges comprised the following:
- Home office and stores $28 million, or $0.08 per share;
- Store fixtures $28 million, or $0.08 per share;
- Management transition $16 million, or $0.04 per share.
Operating cash flow in the first quarter was a use of $752 million compared to a use of $577 million in last year's first quarter. Investing cash flow was a use of $196 million, including capital expenditures of $214 million, compared to a use of $116 million in the same quarter last year. Accrued and unpaid capital expenditures were $335 million at the end of the quarter.
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