NEW YORK — If retailing is suddenly a real estate game, J.C. Penney Co. is more than ready to play.
The company on Thursday reported a 66 percent leap in operating profits for 2004 and executives said during a conference call to discuss the results that, with $2.5 billion in cash, J.C. Penney has enough resources to be “very aggressive” should the right real estate locations become available.
Penney’s is mentioned as a possible buyer for any stores disposed of as a result of any merger between Federated Department Stores and May Department Stores, or if Saks Inc. decides to spin off some of the stores in its Saks Department Stores division.
For the three months ended Jan. 29, income was $333 million, or $1.17 a diluted share, compared with a loss of $1.07 billion, or $3.42, in the same quarter a year ago. Income from continuing operations was $328 million, or $1.16 a diluted share, versus $253 million, or 83 cents, in 2003. Penney’s in 2004 completed the sale of its Eckerd business.
Based on continuing operations, the retailer beat analysts’ consensus estimate of $1.11 a share by five cents. Sales fell by 0.4 percent to $6.07 billion from $6.10 billion, while comps at its retail stores gained 3 percent.
“Our results reflect the impact of effective merchandising programs, including transition of seasonal product, compelling marketing and continued improvement in the shopping experience in our stores,” Myron “Mike” Ullman, who in December succeeded Allen Questrom as chairman and chief executive officer, said in a statement. Last year “was a breakout year.”
Questrom had spearheaded many of the retailer’s cost-cutting initiatives.
Penney’s ratios as a percent of sales also showed improvement: Operating profit was 9.6 percent compared with 7.3 percent a year ago; gross margin was 37.2 percent versus 35.9 percent, and selling, general and administrative expenses decreased to 27.6 percent from 28.6 percent.
Robert Buchanan, analyst at A.G. Edwards & Sons Inc., concluded in a research note, “On the strength of anticipated further improvement in important facets of the [business], we look for J.C. Penney under new ceo Mike Ullman to continue to improve.” Buchanan has a “buy” rating on the stock.The analyst noted in his J.C. Penney report that certain locations in the Northeast and California could become available if Federated does acquire May. With May and Federated having geographic overlap in Boston, Philadelphia, Pittsburgh and all of Southern California, Buchanan concluded that “it will be interesting to see what might happen.”
During the conference call to Wall Street, Ken Hicks, president and chief operating officer of J.C. Penney Stores and merchandise operations, told analysts that the fourth quarter represented the seventh consecutive quarter of comp-store sales increases.
Ullman noted that 2005 represents the last leg of the turnaround and will entail a “very strong focus on execution at the store level.” He said that store associates were “very pleased by the lack of excess fall inventory at the end of the Christmas season and being able to see spring executed so seamlessly. So I think they’re starting to see the benefits of the centralized merchandising investment.”
Career sportswear and fashion jewelry were strong categories in the quarter. Catalogue and Internet sales gained 3.9 percent on a comps basis, while Internet sales specifically surpassed $800 million.
The retailer launched Nicole by Nicole Miller, a dressy casual line, and W, an expansion of the Worthington career brand into dressy weekend apparel, last week. It will soon kick off nick(it), a men’s line that transitions from sportswear to careerwear designed by Nick Graham, who started the Joe Boxer label now sold at Kmart.
The company will open 20 stores in 2005, with 12 using the retailer’s new off-the-mall format.
Penney’s guided first-quarter earnings per share in the range of between 48 cents to 53 cents, and full-year EPS of between $2.89 and $3.01.
For the year, income was $524 million, or $1.76 a diluted share, against a loss of $928 million, or $3.13, in 2003. Income from continuing operations rose 83.2 percent to $667 million, or $2.23, versus $364 million, or $1.21. Sales gained 3.6 percent to $18.42 billion from $17.79 billion, while comps at retail stores rose 5 percent.
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)