NEW YORK (AP) — J.C. Penney Co. reported a 51 percent drop in fourth-quarter profit Friday as customers sharply cut spending on clothing and other items. The results beat Wall Street expectations, but the chain 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.
Analysts surveyed by Thomson Reuters had expected the Plano, Texas -based company to earn 92 cents per share on revenue of $5.76 billion.
Shares of Penney rose 8 cents to $15, while the stock of other department store chains like Macy's Inc. and Nordstrom Inc. fell.
Department stores have been among the hardest hit retailers in the recession as shoppers have focused on necessities. But Penney hasn't had to resort to huge layoffs — unlike Macy's, which announced this month that it will cut 7,000 jobs, almost 4 percent of its work force.
To adjust to the new environment, Penney is opening fewer stores and slashing inventories.
At the same time, it has been aggressively expanding its portfolio of exclusive labels aimed at younger customers, a strategy that has fared well. New this spring are Allen B. By Allen B. Schwartz and "Heart" Ronson by Charlotte Ronson, among the trendy fashions that Penney will spotlight in a TV campaign that will launch Sunday during the Academy Awards.
Meanwhile, officials told investors during a conference call Friday that Penney has been successful in recruiting customers from competitors like Mervyns LLC and Linens 'N Things that have liquidated.
"This is truly a time of survival of the fittest in retailing," said Chairman and Chief executive Myron E. Ullman III.
Penney 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 by 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.
Copyright 2009 The Associated Press.