As it posted results that beat Wall Street on earnings but fell short of its sales expectations, J.C. Penney made several executive changes and other home office staffing adjustments.
The company appointed Joe McFarland as evp/chief customer officer, a newly expanded role that includes responsibility for merchandising and all store operations. In addition, the company promoted Jodie Johnson to head of merchandising for women’s, beauty and family footwear, and James Starke to head of merchandising for men’s, children’s, home and jewelry, both reporting to McFarland.
Therace Risch is assuming the combined titles of chief information officer and chief digital officer to reflect added responsibility for omnichannel retail. As a result of the appointment, Mike Amend will leave the company.
In what it described as an effort to manage and streamline operations, J.C. Penney has eliminated about 130 home office positions across multiple departments. This and other recent restructuring moves should save the company approximately $20 to $25 million annually, J.C. Penney said.
For the fourth quarter ended February 3, J.C. Penney posted net income of $254 million, or 81 cents per diluted share, versus $192 million, or 61 cents per diluted share, in the year-before period. Adjusted for one-time charges, net income was $179 million, or 57 cents per diluted share, versus $202 million, or 64 cents per diluted share, in the year-prior period.
Adjusted earnings per diluted share beat a MarketBeat-published analyst average estimate by 10 cents but revenues fell short of a $4.04 billion revenue expectation.
Comparable store sales gained 2.6% in the quarter year over year. Net sales were $4.03 billion versus $3.96 billion in the year-earlier quarter. Operating income was $247 million as compared to $274 million in the year-previous period.
In the quarter, according to J.C. Penney, the strongest performing merchandise categories were jewelry, home, Sephora, footwear and handbags, and salon while the best performing regions were the Southeast and the Gulf Coast.
For the full fiscal year, J.C. Penney posted a loss of $116 million, or 37 cents per diluted share, versus a net income of $1 million, or zero per diluted share, in the year before. Adjusted earnings were $68 million, or 22 cents per diluted share, versus $24 million, or eight cents per diluted share, in the fiscal year prior.
Comps advanced 0.1% year over year. Net sales were $12.51 billion versus $12.55 billion in the fiscal year earlier. Operating income was $116 million compared to $395 million in the fiscal year previous.
Marvin Ellison, J.C. Penney chairman and CEO, said, “We are encouraged by our results for the fourth quarter and for fiscal 2017. Through the hard work and dedication of the entire J.C. Penney team, we delivered our second consecutive year of positive adjusted earnings. For 2017, we improved adjusted earnings per share by 175%, reduced our outstanding debt levels by over $600 million and generated over $200 million of free cash flow. During the fourth quarter, we delivered our strongest positive sales comps and achieved our largest gross margin improvement for the year. Our fourth quarter gross margin improvement, combined with our continued commitment to expense discipline, helped us generate adjusted earnings per share of 57 cents for the quarter.”
In the current fiscal year, Ellison said, J.C. Penney will “intensify our market share efforts in appliances, mattresses and furniture, while continuing to take steps to modernize our apparel assortment and omnichannel. Our strategy and plan is clear and consistent, and we remain focused on two critical factors: to operate the business for growth and deliver profitable earnings.”