Fourth quarter earnings and cash flow for JCPenney were significantly better than expected, company officials said, but overall and comparable store sales for the time period were down.
Total sales in the fourth quarter decreased 3.6% compared to last year, while comparable store sales decreased 4.5%. The company said the strongest merchandise results were in women’s apparel and shoes, and geographically, the best performance was in the central region of the country. The weakest results were in the home division and the northwest region.
Adjusted operating income for the fourth quarter, which excludes the impact of the non-cash qualified pension plan expense, was $454 million and increased 27.9% compared with $355 million in last year’s fourth quarter.
“JCPenney far exceeded its expectations and objectives for the year. By stepping up the style of the merchandise we offer customers and enhancing service in our stores, we were able to drive cash generation and profitability, in spite of the difficult economic climate,” said Myron E. (Mike) Ullman, III, chairman and chief executive officer. “Our disciplined approach to inventory planning, promotions and SG&A served us well, particularly in the fourth quarter with a planned lower sales volume. As a result, we were able to achieve new peak gross margin levels for the year, which led to better-than-expected profitability and cash flow generation.
Ullman said the company’s focus for fiscal 2010 is to drive top-line growth and deliver positive comparable store sales and market share growth. To meet that goal, he said JCPenney will look to leverage what he said is the retailer’s position as a destination for affordable style while continuing to create a sense of discovery and excitement for its shoppers.
For full year 2009, total sales decreased 5% compared to last year, while comparable store sales decreased 6.3%.
Ullman said the company’s financial position improved significantly during 2009, and the cash and cash equivalents balance as of fiscal year-end 2009 was $3.0 billion, an increase of $659 million over last year largely due to the $806 million of free cash flow during the year.