Gross margin improved by 30 basis points to 38.4 percent of sales, reflecting continued benefits from private brand performance and better flow of merchandise.
Second quarter operating profit was $271 million, a 27.2 percent increase from last year's $213 million. During the quarter, the company repurchased 8 million shares of common stock for $530 million. Management expects to complete the current repurchase program in the third quarter.
In addition, the company completed the rollout of its new POS system during this year's second quarter. This new system offers faster transaction times and provides access to jcp.com at all registers, enhancing the shopping experience and expanding the merchandise assortment.
The following guidance reflects the company's current expectations for the third and fourth quarters:
-- Comparable store sales: low single digit increase in both quarters.
-- Direct sales: low single digit increase in the third quarter, mid single digit increase in the fourth quarter (note: the fourth quarter includes a 53rd week in 2006).
-- 53rd Week (Q4): approx. $150 million of sales for department stores (no impact on comp sales) and $50 million of sales for Direct.
-- Earnings per share: approx. $1.07 per share in the third quarter and approx. $1.84 in the fourth quarter. Full year earnings are now expected to be in the area of $4.55 per share.
JC Penney Corporation Inc, the wholly owned operating subsidiary of JC Penney Company Inc, is one of America's largest department store, catalog, and e-commerce retailers, employing approx. 151,000 associates. It operates 1,021 JC Penney department stores throughout the United States and Puerto Rico.
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