J. C. PENNEY COMPANY, INC. REPORTS 2012 FISCAL THIRD QUARTER RESULTSPLANO, Texas, Nov. 9, 2012 – J. C. Penney Company, Inc. (NYSE: JCP) today announced financial results for its fiscal third quarter ended October 27, 2012. For the quarter, jcpenney reported a net loss of $123 million or $0.56 per share. Excluding the net gain on the sales of non-core assets, restructuring and management transition charges, and non-cash primary pension plan expense, adjusted net loss for the quarter was $203 million or $0.93 per share. A reconciliation of GAAP to non-GAAP financial measures is included in the schedules accompanying the consolidated financial statements included with this release.
Ron Johnson, chief executive officer of jcpenney said, "While the quarter overall was challenging, the performance of jcp's new brands and shops reinforces our conviction to transform jcpenney into a specialty department store. Today, jcp is really a tale of two companies. By far the largest part of our store is the old jcpenney, which continues to struggle and experience significant challenges as evidenced by our third quarter results. However, the new jcp, centered around the shop concept, is gaining traction with customers every day and is surpassing our own expectations in terms of sales productivity which continues to give us confidence in our long term business model."
During the quarter, the Company opened shops under the Levi's, Izod®, Liz Claiborne®, The Original Arizona Jean Co.®, and jcp™ brands. The Company also opened 38 Sephora inside jcpenney stores, bringing the total to 386. Currently, the Company has transformed approximately 7.2 million square feet of selling space into the shop format. The Company will provide additional detail on year-to-date shop performance during an earnings presentation conducted later today.
Third Quarter Results:
Comparable store sales for the third quarter declined 26.1 percent and total sales decreased 26.6 percent. Internet sales through jcp.com were $214 million in the third quarter, decreasing 37.3 percent from last year.
Gross margin was 32.5 percent of sales, compared to 37.4 percent in the same period last year. Gross margin was impacted by lower than expected sales in the quarter and a higher level of clearance merchandise sales.
The Company's SG&A expenses decreased $155 million compared to last year's third quarter. For the third quarter, the Company incurred $34 million in restructuring and management transition charges. These charges comprised the following:
- Home office and stores $4 million, or $0.01 per share;
- Store fixtures $18 million, or $0.05 per share;
- Supply chain $3 million, or $0.01 per share;
- Management transition $6 million, or $0.02 per share;
- Other $3 million, or $0.01 per share.
As a result of previous actions taken to reduce the workforce, the Company re-measured its pension plans during the quarter, which resulted in a reduction to non-cash primary pension plan expense of $27 million, bringing total primary pension plan expense in 2012 to $167 million.
The Company ended the third quarter with approximately $525 million in cash and cash equivalents on its balance sheet.
During the quarter, the Company opened seven new jcpenney stores, including four new stores and three relocations.
Sale of Non-Core Assets:
As part of jcpenney's strategy to monetize assets that are not core to its operations, the Company generated $279 million of cash from the sale of several non-core assets during the third quarter.
Earnings Event Today/Webcast Details:
At 8:00 a.m. ET today, the Company will host an in-person meeting with members of the financial community at SIR Stage 37 in New York City where the jcp leadership team will provide further commentary on the Company's third quarter 2012 financial results. The presentations and question-and-answer session will also be available live via streaming video and webcast on the Company's investor relations website at http://ir.jcpenney.com. Replays of the webcast will be available for up to 90 days after the event.
For individuals without access to the webcast, the event will also be available via live conference call in listen-only mode. To access the presentations and question-and-answer session, please dial (866) 713-8395, or (617) 597-5309 for international callers, and reference 50754540 participant code. Telephone playback will be available for seven days beginning approximately two hours after the conclusion of the meeting by dialing (888) 286-8010 and (617) 801-6888 for international callers and referencing 15554609 participant code.
For further information, contact:
Eric Cerny and Angelika Torres; (972)431.5500
Kristin Hays and Joey Thomas; (972)431.3400
More than a century ago, James Cash Penney founded his company on the principle of the Golden Rule: treat others the way you'd like to be treated – Fair and Square. His legacy continues to this day, as J. C. Penney Company, Inc. (NYSE: JCP) boldly transforms the retail experience across 1,100 stores and jcp.com to become America's favorite store. Focused on making the customer experience better every day, jcpenney is dreaming up new ways to make customers love shopping again. On every visit, customers will discover great prices every day in a unique Shops environment that features exceptionally curated merchandise, a dynamic presentation and unmatched customer service. For more information, visit us at jcp.com.
This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which reflect the Company's current views of future events and financial performance, involve known and unknown risks and uncertainties that may cause the Company's actual results to be materially different from planned or expected results. Those risks and uncertainties include, but are not limited to, general economic conditions, including inflation, recession, unemployment levels, consumer spending patterns, credit availability and debt levels, changes in store traffic trends, the cost of goods, trade restrictions, the impact of changes designed to transform our business, customer acceptance of our new strategies, the impact of cost reduction initiatives, implementation of new systems and platforms, changes in tariff, freight and shipping rates, changes in the cost of fuel and other energy and transportation costs, increases in wage and benefit costs, competition and retail industry consolidations, interest rate fluctuations, dollar and other currency valuations, the impact of weather conditions, risks associated with war, an act of terrorism or pandemic, a systems failure and/or security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information and legal and regulatory proceedings. Please refer to the Company's most recent Form 10-K and subsequent filings for a further discussion of risks and uncertainties. Investors should take such risks into account when making investment decisions. We do not undertake to update these forward looking statements as of any future date.
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