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JCPenney's Ullman: 'Challenging Part Of Turnaround Behind Us'

Thursday February 27th, 2014 - 10:24AM


J.C. Penney Company, Inc. announced financial results for its fiscal fourth quarter and full year ended February 1, 2014.

Mike Ullman, CEO, said, "JCPenney achieved what it set out to do on a number of important fronts in 2013. We stabilized our business, both financially and operationally, and restored our process disciplines, promotions, inventory levels and focus on the customer. As a result, we generated positive comparable store sales in the fourth quarter and ended the year with more than $2 billion in total available liquidity. These important accomplishments reflect the progress we have made in our turnaround, which remains on course heading into 2014."

For the fourth quarter, JCPenney reported net sales of $3.78 billion compared to $3.88 billion in the fourth quarter of 2012, which included the additional 53rd week. Comparable store sales rose 2% for the quarter, which represented a sequential improvement of 680 basis points when compared to the third quarter of fiscal 2013. Online sales through jcp.com were $381 million for the quarter, up 26.3% versus the same period last year, excluding the 53rd week.

Home, men's apparel, women's accessories and Sephora inside JCPenney were the company's top performing merchandise divisions.

For the quarter, gross margin was 28.4% of sales, compared to 23.8% in the same quarter last year, representing a 460 basis point improvement.

The company incurred $50 million in restructuring and management transition charges, including $22 million in home office and stores, $5 million in management transition and $23 million of “other.”

For the full year 2013, the company reported that comparable store sales decreased 7.4%. Total sales decreased 8.7% for the year. Internet sales through jcp.com grew $59 million to $1.08 billion for the year, increasing 5.8% over last year.

For the year, gross margin decreased 190 basis points to 29.4% when compared to the prior year's 31.3%.

The company reported an operating loss for the full year of $1.42 billion, which includes $215 million of restructuring and management transition charges. Excluding restructuring and management transition charges, the net gain on the sale of non-operating assets of $132 million and the qualified pension plan expense of $100 million for the year, the adjusted operating loss was $1.24 billion.

During the year, the company opened 60 new Sephora inside JCPenney locations, bringing the total to 446.

Ullman continued, "With the most challenging and expensive parts of the turnaround behind us, we will focus on improving gross margin, managing expense and steadily growing our sales in 2014. Our strategic plan seeks to enhance performance across all of the key drivers of our business: merchandising, marketing, store experience, jcp.com, our teams, and our operations. The goal is to deliver consistently improving financial results, and to restore JCPenney as a leader in American retail."