By  on May 18, 2005

NEW YORK — J.C. Penney more than quadrupled its first-quarter profits thanks in part to a hefty boost from its Internet business, which drove up the retailer's top line by 3.9 percent.

Earnings raced ahead of analyst expectations by 2 cents.

"It was a good quarter. We've been very pleased with our performance so far this year. It was consistent with what we articulated in our analyst meeting on April 20," said Myron Ullman 3rd, chairman and chief executive officer of J.C. Penney, in a telephone interview.

For the three months ended April 30, net income was $172 million, or 63 cents a diluted share, compared with $41 million, or 13 cents, in the same year-ago quarter. Wall Street analysts' consensus estimates called for 61 cents a diluted share. The quarterly results also included $22 million in income primarily from the sale of real estate and pretax charges of $13 million related to the repurchase of debt in open-market transactions. Income from continuing operations rose to $172 million from $118 million. Since the year-ago quarter, the company divested itself of its Eckerd drugstore business.

Sales in the quarter rose to $4.2 billion from $4 billion, while comps gained 3 percent on top of a 9.5 percent increase in last year's first quarter. By channel, total department store sales rose 3.7 percent, while catalogue-Internet sales were up 5.4 percent on top of a 6.5 percent gain a year ago. Internet sales jumped 35 percent for the quarter.

The ceo said he was proud of the company's catalogue infrastructure, which supports Although the company does not break out sales by volume of its catalogue and Internet business, Ullman said the "Internet business within the next 12 months will have a sales revenue of $1 billion."

While the company also has a sizable amount of seamless crossover between its three channels, it is also planning on improving access for both the consumer and store associates.

The retailer has begun installing new point-of-sale technology in all of its stores. Two markets are now completed and a total of 40 percent of its store base will be outfitted with the new POS systems by October, with the balance being done during 2006. The new technology enables the retailer to connect its three shopping channels through in-store access to, according to Ullman.

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