JC Penney reports EPS up 66% & Q1 operating sales climbs 37 to 7.5% for 2005

18 May '05

6 min read

First quarter operating profit was $313 million or 7.5 percent of sales, compared with $229 million, or 5.7 percent of sales, last year. This represents an increase of nearly 37 percent, or 180 basis points as a percent of sales.

Other Charges and Credits
The company reported $22 million of income as real estate and other, principally related to a gain from the sale of real estate. In addition, during the quarter, the company incurred pre-tax charges of $13 million related to the repurchase of debt in open market transactions. Net interest expense was $53 million during the quarter, which was better than original expectations, and benefited from increased cash balances throughout the quarter and higher short-term interest rates on cash investments.

Financial Condition
JCPenney's financial condition remains strong. As of April 30, 2005, the company had cash investments of $4.1 billion, which will be reduced over the balance of the year as the capital structure repositioning program is completed. Long-term debt totaled $3.7 billion, including $264 million of current maturities. Free cash flow for the quarter was a negative $106 million, which was in line with expectations. The company continues to expect to generate about $100 million of positive free cash flow for the full year.

Capital Structure Repositioning
During the first quarter, the company repurchased 7.7 million shares of its common stock. Since inception of the capitale cash flow for the full year.

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