JCPenney 4Q Home Biz Weak
Jennifer Marks -- Furniture Today, February 22, 2010
The home business at JCPenney is sputtering to life – in spots – but is not expected to catapult back to the forefront of the business this year.
In soft home, JCPenney is seeing a pick-up “where there is newness and freshness,” said Mike Ullman, chairman and ceo. The home business online, once the biggest driver of the retailer’s ecommerce, is starting to improve.
“That’s always a leading indicator,” Ullman said during the company’s quarterly conference call last week.
The window and furniture segments are still struggling, a situation Ullman partly attributed to tighter consumer credit controls. And home was the weakest performing category during the fourth quarter.
Looking ahead at 2010, he said: “We feel good about it versus plan, but don’t expect it to be a leading category.”
As to American Living, a multi-category program that includes home, Ullman believes the price points and styling have been adjusted properly, but added JCP needs to improve brand awareness and profitability. “It’s doing well in some categories, not as well in others,” he said.
The company reported “significantly better than expected” fourth quarter earnings. For the quarter ended Jan. 30, earnings per share from continuing operations were 84 cents, down 11.6% from EPS of 95 cents last year. Penney’s most recent guidance called for EPS in the range of 77 cents to 82 cents.
Net income was $200 million, down 5.2%, but gross margin increased 360 basis points over last year to 38.2% of sales.
Sales declined 3.6% to $5.55 billion, while comps fell 4.5%.
For the full year, EPS dropped 58.0% to $1.08, and net income fell 56.1% to $251 million.
Sales fell back 5% to $17.56 billion, and comps declined 6.3%.
This year, the company will focus on boosting top-line sales and comps, said Ullman. But Penney expects the retail environment to “remain difficult,” with the second half performing better than the first.
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