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JC Penney Q2 profit surges on women's accessories, ups earnings guidance

Aug '06
Apparel retailer JC Penney Company Inc has reported record second quarter operating profit and earnings.

Operating profit increased 27.2 percent to $271 million from $213 million last year and improved 100 basis points to 6.4 percent of sales. Operating profit improvement was driven by strong sales performance, coupled with improved gross margin and leverage of selling, general and administrative expenses.

Second quarter 2006 earnings per share from continuing operations increased 63.0 percent to $0.75 from $0.46 last year. Earnings per share in both years include the benefits of one-time tax credits as well as the effects of the company's ongoing share repurchase program.

"The company had an excellent second quarter, with good customer response to fine jewelry, children's and women's accessories, as well as a solid rebound in apparel categories, particularly women's," said Myron (Mike) Ullman, III, Chairman and CEO.

Ullman added, "We continue to improve the fundamentals of our existing businesses and are poised for the acceleration of our new store growth. In the third quarter, we will open 25 stores, with 17 in the new and successful off-mall format. Twenty of these stores will open on October 6th, the most store openings in a single day in the company's recent history, and beginning in 2007, we plan to open 50 stores per year."

Second quarter total department store sales increased 7.1 percent and comparable department storesales increased 6.6 percent. Sales were ahead of the company's initial guidance and increased in all merchandise divisions and regions of the country. The strongest merchandise results were in fine jewelry, children's and women's accessories, and the best regional performance was in the west and southeast. During the quarter, Direct sales increased 2.7 percent, and jcp.com sales increased approx. 25 percent.

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