J.C. Penney Co.'s first-quarter net income rose nearly 7 percent because of cost-cutting and strong reception to its exclusive merchandise. The department store chain also raised its full-year earnings profit guidance.
The company on Monday reported net income of $64 million, or 28 cents per share, for the three months ended April 30. That compares with $60 million, or 25 cents per share, in the same period last year.
Revenue edged up to $3.94 billion from $3.93 billion. Penney's revenue at stores open at least a year rose 3.8 percent, fueled by its exclusive brands such as Liz Claiborne, Worthington and MNG by Mango. The gauge is a key indicator of a retailer's health.
Analysts had predicted earnings of 26 cents on revenue of $3.94 billion, according to FactSet.
"We are successfully implementing our merchandising initiatives, with strong gains in both our men's and women's apparel businesses," CEO Myron E. Ullman III said in a statement. "Additionally, the steps we have taken to manage our expenses position us to increase the flow-through of sales to the bottom line."
Under pressure from shareholders, Penney has cut costs, including closing some stores, outlets and call centers. It is also finishing up closing its catalog business after announcing in November 2009 that it would stop publishing its twice-a-year "big book."
Ullman promised more cost savings, including trimming marketing expenses and streamlining sourcing operations. The company expects to save about $25 million to $30 million by 2013, with about half of that in 2012.
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He expects $5 per share in earnings for 2014.
Like many department stores, J.C. Penney has been expanding its assortment of exclusive merchandise. Last year, it became the only U.S. retailer to sell Liz Claiborne and Claiborne women's wear, though the Isaac Mizrahi-designed Liz Claiborne New York brand went to QVC. It's also the only department store selling MNG by Mango, a European clothing chain.
During the first quarter, it added 23 Sephora shops inside Penney stores, bringing the total to 254.
For the second quarter, Penney expects revenue at stores open at least a year to rise anywhere from 3 percent to 4 percent. It expects earnings per share between 20 and 24 cents, including restructuring charges of about 6 cents per share. Analysts predict 22 cents per share, according to FactSet.
The company raised its guidance to a range of $2.15 per share to $2.25 per share. In February, it had forecast a range of $2 per share to $2.10 per share. Analysts had expected $2.09 per share.
