J.C. Penney Co. Inc. reported a sharp drop in net income and sales in the fourth quarter but cited progress in its turnaround efforts with improvements in margins and women’s apparel.
Net income for the fourth quarter was $27 million, or 8 cents a share, compared to net income of $75 million, or 24 cents a share, in the same period a year ago. Adjusted net income was $43 million, or 13 cents a share, compared to adjusted net income of $57 million, or 18 cents a share, a year ago.
Sales in the fourth quarter decreased 7.7 percent to $3.38 billion compared to $3.67 billion for the fourth quarter a year ago. Comparable store sales decreased 7 percent in the quarter.
Adjusted comparable store sales, which exclude the impact of the company’s exit from major appliances and in-store furniture, decreased 4.7 percent.
“In fiscal 2019, we met or exceeded all five financial metrics for the year, and we delivered our third consecutive quarter of meaningful gross margin improvement in the fourth quarter,” said chief executive officer Jill Soltau. “I am encouraged by our progress, especially in our women’s apparel business. We knew it would take time to restore discipline and return growth to J.C. Penney. As we move into fiscal 2020, we remain focused on the key tenets of retail as we continue rebuilding the company and implementing our plan for renewal.”
For all of 2019, the net loss was $268 million, or 84 cents a share, compared to a net loss of $255 million, or 81 cents, in 2018.
Sales decreased 8.1 percent to $10.72 billion compared to $11.66 billion in 2018. Comparable store sales decreased 7.7 percent. On an adjusted basis, comparable store sales decreased 5.6 percent.
On the positive side, in 2019 the cost of goods sold, which excludes depreciation and amortization, was $7.01 billion, or 64.4 percent of sales, compared to $7.87 billion or 67.5 percent of sales, a 210 basis point improvement driven by an increase in store and online selling margins, improved shrink results and the exit of major appliances and selling furniture in the stores. Inventory was down 11.1 percent to $2.17 billion at the end of fiscal 2019.
For this year, the company forecasts comparable store sales to be down from 3.5 to 4.5 percent. At least six stores will close this year.