Penney says profit rose from last year
PLANO, Texas (AP) – J.C. Penney Co. said Tuesday that third-quarter profits rose as sales improved at both department and drug stores. Penney said it earned $123 million, or 42 cents per share, for the three months ended Oct. 26 compared to $31 million, or 9 cents per share, last year.
Excluding a gain from the sale of its direct-marketing business, Penney said it would have earned 30 cents per share. On that basis, analysts surveyed by Thomson First Call had expected Penney to earn 27 cents per share.
Revenue rose to $7.87 billion from $7.73 billion.
Penney, which has continued to close small numbers of stores with weak sales, said sales at remaining stores open at least one year rose 3.9 percent from last year’s third quarter. Comparable-store sales at Eckerd drug stores gained 4.9 percent, the company said.
The company said it had to contribute $300 million, or $190 million after taxes, to maintain full funding of its pension plan. Many companies have been forced to increase contributions as pension plans have earned less money due to poor returns on stock or other investments.
Plano-based Penney operates more than 1,000 department stores and about 2,600 drug stores. Penney said department stores had an especially strong October, with good sales of apparel, jewelry and home items.
Catalogue sales, however, continued to drop, falling another 21 percent due to lower circulation and fewer items.
Most of the gains at Eckerd were due to higher pharmacy sales, as sales from other merchandise was flat. Pharmacy sales were hurt by consumers who substituted generic drugs for brand-names products.
Chairman and chief executive Allen Questrom the company was pleased with results in all its businesses. He said the company was doing a better job of managing inventory and raising profit margins in the second year of a turnaround effort.Questrom said Penney still expects to earn about 60 cents per share in the fourth quarter, which would be a lift from the 35 cents per share earned in last year’s holiday quarter and better than the 57 cents per share forecast by analysts.
For the first nine months of the year, Penney earned $203 million, or 68 cents a share, versus a profit of $3 million a year ago.
Nine-month sales amounted to $22.8 billion from $22.46 billion.