Penney triples operating profits

By Staff -- Home Textiles Today, 5/18/2004 12:00:00 AM

PLANO, Texas — Helped by sharply stronger same-store sales in its core department store business, and at the same time building margins, first-quarter operating profit almost tripled at J.C. Penney Co. Inc., shooting up 172.6 percent, to $229 million from $84 million a year ago.

Saddled with a $77 million one-time charged tied to the sale of its Eckerd drug store business, overall profits were off by a third, declining 32.8 percent, to $41 million from $61 million last year.

Department store, catalog and Internet sales climbed 8.7 percent, to $4 billion from $3.7 billion. Same-store sales in department stores shot up 9.5 percent, after declining 4.8 percent in the year-before quarter. Catalog and Internet sales improved 6.5 percent, compared to a drop of 11.1 percent during the same period a year ago.

Lending further support to the bottom line, average gross margin widened by 80 basis points, or eight-tenths of a percentage point, to 40 percent from 39.2 percent. In another big assist, operating costs, when measured as a percentage of costs, were reduced 260 basis points, or two and six-tenths percentage points, to 34.3 percent from 37 percent.

"Sales and operating profits far exceeded our plan, reflecting the strengthening of our value position for the moderate consumer," said Allen Questrom, chairman and CEO.