J.C. Penney Co. reported a 51 percent drop in fourth-quarter profit on Friday as customers sharply cut spending on clothing and other more discretionary items. The department store chain also projected a wider first-quarter loss than analysts had predicted.
The retailer earned $211 million, or 95 cents per share, for the three months ended Jan. 31. That compares with $430 million, or $1.93 per share, a year earlier.
Sales dropped almost 10 percent to $5.76 billion from $6.39 billion. Same-store sales, or sales at stores open at least a year, fell 10.8 percent. Same-store sales are a key indicator because they measure growth at existing stores rather than newly opened ones.
Department store chains like Penney and Macy's Inc. have been among the hardest hit retailers in the recession as shoppers have focused on necessities. To adjust to the new environment, Penney is opening fewer stores and slashing inventories.
At the same time, the chain has been aggressively expanding its portfolio of exclusive labels aimed at younger customers. New this spring are Allen B. By Allen B. Schwartz and "Heart" Ronson by Charlotte Ronson. They are part of handful of trendy fashions that Penney will spotlight in a TV ad campaign that will launch Sunday during the Academy Awards.
"Throughout the year, we took steps to significantly reduce our inventories and operating expenses in order to withstand the impact of the economic conditions," Myron E. Ullman III, the company's chairman and chief executive, said in a statement. "At the same time, we stepped up the style we offer and focused on effectively communicating the newness, excitement and value in our merchandise."
But the company said it expects a per-share loss of between 20 cents and 30 cents in the first quarter. Analysts had expected a loss of 19 cents, according to Thomson Reuters. Penney also said total sales would drop from 10 percent to 13 percent and that same-store sales would drop between 12 percent and 15 percent in the first quarter.
As of Jan. 31, Penney said, it had cash and cash equivalents of $2.4 billion and long-term debt of $3.5 billion. Merchandise inventories totaled $3.3 billion and were about 13.5 percent lower than last year on a same-store sales basis. Capital expenditures were approximately $970 million in 2008, moderately lower than the company's $1 billion plan.
Penney said Friday that it has decided not to hold its annual analysts' meeting in Plano because of many firms' constrained travel budgets. Instead, it will hold the meeting in New York on April 22.