J.C. Penney Profit Soars, Outlook Boosted
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J.C. Penney Co. Inc. (JCP), which has transformed itself from a dowdy, mid-priced retailer into a mainstream department store with fashionable designer merchandise, posted a fourfold jump in quarterly profit on Tuesday and raised its forecast for the year.
The company, whose shares rose 1 percent, reported net earnings of $172 million, or 63 cents per share, for the fiscal first quarter ended April 30, up from $41 million, or 13 cents per share, a year earlier.
The per-share earnings were 2 cents better than the average forecast among analysts polled by Reuters Estimates.
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"The results were very strong, as expected," said Michael Koskuba, an analyst with Victory Newbridge Capital Management. "The company continues to do a good job with merchandise offerings, and it's important when the head of company wants to be the choice for middle America ... it's an area a lot of retailers miss or might ignore."
Plano, Texas-based Penney is wrapping up a successful five-year turnaround in which it sold its money-losing Eckerd drugstores (search) to focus on its department store, Internet and catalog businesses.
It recently launched a moderately priced, casual women's clothing line targeting middle-income women aged 35 to 54, and is also working on "nick(it)," a men's clothing line.
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Penney ran a high-profile advertising campaign around its brands during the Academy Awards telecast in February.
At an analyst meeting last month, Chief Executive Mike Ullman unveiled a long-term plan for the company to make an "emotional connection" with shoppers and create an easier shopping environment and a better workplace.
Sales at department stores open at least a year, or same-store sales, rose 3 percent in the first quarter. Catalog and Internet sales rose 5.4 percent.
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Overall sales rose 3.9 percent to $4.19 billion, in line with analysts' average forecast.
For the second quarter, Penney said same-store sales are expected to increase in the low single digits, with catalog and Internet sales rising in the low to mid-single digits.
It expects earnings from continuing operations of 25 cents to 30 cents per share for the second quarter.
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For the full year, Penney raised its forecast for earnings from continuing operations to a range of $2.96 to $3.08 per share, up from prior guidance of $2.94 to $3.06.
The second-quarter and full-year forecasts assume charges of about 2 cents per share and 5 cents per share, respectively, related to debt retirements, and charges of 1 cent per share and 8 cents per share, respectively, for expensing of stock options.
Penney shares opened at $48.30, up 47 cents, on the New York Stock Exchange (search).