JC Penney reports profitable trends
Janice Chamberlain -- Furniture Today, November 9, 2006
Plano , Texas -- Buoyed by stronger sales and wider margin s, third-quarter profits at JC Penney jumped up by 22.6% to $287.0 million from $234.0 million last year. Sales improved by 6.7% to $4.8 billion from $4.5 billion last year, helped by back-to-school selling and new product launches. Same-store sales rose 5.2%.
Sales at JC Penney department stores increased by 7.0%, improving on a 3.0% i ncrease during the same period a year ago. Department store comps grew by 5.2%, doubling the year-ago gain of 2.5%. Direct -to-consumer sales grew by 5.3%, reversing a year-ago decline of 0.9%.
“Furniture and window coverings are still the weakest of the home categories,” chairman and ceo Mike Ullman told analysts this morning, but noted their underperformance was more than made up for by the company “doing exceedingly well in soft goods across the store, including soft home.”
"Our private label and exclusive brands are growing in importance, clearly differentiating JCPenney in the eyes of the consumer," said Ullman. He said that Studio, the latest addition to the private brand JC Penney Home collection, is doing “very, very well -- addressing the opportunity that our customer said that we had in our updated home merchandise assortment.”
Bolstering the bottom line, in addition to stronger sales, Penney bulked up average gross margin by 80 basis points, or eight-tenths of a percentage point, to 42.6% from 41.8% a year ago.
Looking ahead to the all-important Christmas selling season, the company forecast department store comps to grow in the low single digits, and raised its fourth-quarter earnings estimate to $1.94 per share.
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