Printer Friendly

JCPenney Reports Operating Earnings of 85 Cents Per Share

PLANO, Texas, Nov. 11 /PRNewswire/ -- J. C. Penney Company, Inc. (NYSE: JCP) today reported operating earnings for the quarter ended October 25, 1997, of 85 cents per share as compared with $1.03 per share in last year's third quarter. Operating earnings exclude one-time costs associated with the Company's recently announced voluntary early retirement program and business integration expenses primarily related to drugstores. Including the effects of these expenses, net income was $113 million, or 40 cents per share (fully diluted).

JCPenney Stores and Catalog

Operating profit for JCPenney Stores and Catalog was $420 million in the third quarter of 1997 compared with $431 million in the same period a year ago. For the quarter, sales declined by 0.8 per cent compared with third quarter 1996. FIFO gross margin as a per cent of sales increased 20 basis points compared with last year's third quarter. Selling, general, and administrative (SG&A) expenses were well managed during the quarter and were about even with the comparable period last year. Inventories are on plan and about three per cent below last year's levels.

Eckerd Drugstores

Operating profit, including the effects of LIFO, for Eckerd totaled $64 million in the quarter compared with $51 million in last year's third quarter on a pro forma basis, assuming the Company's drugstore acquisitions had occurred at the beginning of 1996. On a FIFO basis, operating profits were $72 million this year compared with $56 million last year. Comparable store sales increased 7.2 per cent for the third quarter. FIFO gross margin as a per cent of sales increased by 10 basis points compared with third quarter 1996 pro forma results. SG&A expenses continued to be leveraged, and for the quarter, improved by 40 basis points as a per cent of sales compared with last year. These results were achieved during a period of significant transition and integration activities. By the end of the quarter, all stores had been converted to the Eckerd format.

Insurance

In the third quarter, operating profit for Insurance increased about 9 per cent over last year's comparable period on a revenue increase of 12 per cent.

Net Interest Expense and Credit Operations

Net interest expense and credit costs increased in the third quarter of 1997 due principally to higher interest costs associated with drugstore acquisitions.

Credit operating costs, on a net basis, increased $6 million in the 1997 third quarter over the comparable period last year. Increases in finance charge revenue and lower credit operating costs substantially offset increases in bad debt. Net bad debt expense increased $20 million, or about 28 per cent, in this year's third quarter compared with the 1996 comparable period. Delinquency rates and personal bankruptcies continue to be above plan.

Restructuring and Business Integration Expenses, Net

During the third quarter of 1997, the Company recorded a $158 million pre-tax charge related to its previously announced voluntary early retirement program. Approximately 1,250 of the 1,575 eligible management associates accepted early retirement under the program. It is expected that the Company will realize ongoing, annual benefits of $85 to $90 million related to the retirements. In addition, the Company recorded other business acquisition and consolidation expenses totaling $32 million in the third quarter. These expenses were comprised principally of costs associated with the integration of the drugstore operations which were partially offset by gains on the sale of the remainder of the Company's consumer banking assets.

Commenting on the results, James E. Oesterreicher, chairman and chief executive officer, said, "The outlook for the fourth quarter is positive for each of our businesses. The integration of Eckerd has been substantially completed, margins as a per cent of sales in JCPenney Stores and Catalog have strengthened, and inventories are in good shape for the holiday season. Our management is committed to building shareholder value."
 J.C. PENNEY COMPANY, INC.
 and Subsidiaries
 SUMMARY OF OPERATING RESULTS
 (Amounts in millions except per share data)
 13 weeks ended 39 weeks ended
 Per Per
 Oct. 25, Oct. 26, Inc. Oct. 25, Oct. 26, Inc.
 1997 1996 (Dec.) 1997 1996 (Dec.)


Operating segment

results:

Revenue

JCPenney stores
 & catalog $ 4,926 $ 4,967 -0.8 $13,213 $12,922 2.3


Eckerd
 drugstores 2,281 570 +100.0 6,896 1,574 +100.0
 Insurance 233 208 12.0 686 601 14.1


Total sales
 & revenue 7,440 5,745 29.5 20,795 15,097 37.7


Margins and expenses

LIFO gross margin

JCPenney stores
 & catalog 1,569 1,575 -0.4 4,080 4,007 1.8
 Eckerd drugstores 469 125 +100.0 1,471 345 +100.0
 2,038 1,700 19.9 5,551 4,352 27.6


Selling, general

& administrative

expenses

JCPenney stores
 & catalog 1,149 1,144 0.4 3,342 3,269 2.2
 Eckerd drugstore 405 107 +100.0 1,197 296 +100.0
 1,554 1,251 24.2 4,539 3,565 27.3


Operating profit (EBIT)

JCPenney stores
 & catalog 420 431 -2.6 738 738 0.0
 Eckerd drugstores 64 18 +100.0 274 49 +100.0
 Insurance 51 47 8.5 157 136 15.4
 Other unallocated 5 7 N/A 34 42 N/A


Total operating
 profit (EBIT) 540 503 7.4 1,203 965 24.7


Net interest expense

& credit
 operations (152) (92) 65.2 (355) (177) +100.0


Amortization of

goodwill &

intangible assets

& minority
 interest (14) -- N/A (72) -- N/A


Restructuring

& business

integration
 expenses (190) (34) N/A (217) (34) N/A


Income before income
 taxes 184 377 -51.2 559 754 -25.9
 Income taxes (71) (141) -49.6 (217) (283) -23.3
 Net income $113 $236 -52.1 $342 $471 -27.4


Operating earnings per

share before

Restructuring &

business integration

expenses, net -
 fully diluted $ 0.85 $ 1.03 -17.5 $ 1.76 $1.97 -10.7


Net income

per share -
 fully diluted $ 0.40 $ 0.95 -57.9 $ 1.25 $ 1.89 -33.9
 13 weeks ended 39 weeks ended
 Oct. 25, Oct. 26, Oct. 25, Oct. 26,
 1997 1996 1997 1996


SEGMENT FINANCIAL DATA:

Comp stores sales
 JCPenney stores -2.5 6.2 1.2 2.1
 Eckerd drugstores 7.2 6.8 7.5 8.1


FIFO gross margin as

a percent of sales

JCPenney stores
 & catalog 31.9 31.7 30.9 31.0
 Eckerd drugstores 21.0 20.9 (a) 21.6 21.6 (a)


LIFO gross margin as

a percent of sales

JCPenney stores
 & Catalog 31.9 31.7 30.9 31.0
 Eckerd drugstores 20.6 20.6 (a) 21.3 21.4 (a)


SG&A expenses as

a percent of sales

JCPenney stores
 & catalog 23.3 23.0 25.3 25.3
 Eckerd drugstores 17.8 18.2 (a) 17.4 18.0 (a)


Operating profit (EBIT)

as a percent of

revenue

JCPenney stores
 & catalog 8.6 8.7 5.6 5.7


Eckerd drugstores
 (FIFO) 3.2 2.7 (a) 4.2 3.6 (a)


Eckerd drugstores
 (LIFO) 2.8 2.4 (a) 3.9 3.4 (a)
 Insurance 21.9 22.6 22.9 22.6


SUPPLEMENTAL DATA

Average fully
 diluted shares 270.7 248.8 267.6 248.1


Primary earnings

per share
 net income $ 0.40 $ 0.98 $ 1.25 $ 1.93


Average primary
 shares 251.9 229.2 248.7 228.3


Net interest

expense & credit

operations:

Finance charge
 revenue $ 156 $ 148 $ 501 $ 465
 Credit costs (161) (147) (431) (398)


Interest expense,
 net (147) (93) (425) (244)
 Net $ (152) $ (92) $ (355) $ (177)
 Delinquency rate 4.8 4.1


Effective income
 tax rate 38.6 37.4 38.9 37.5


Customer receivables
 services 4,375 4,297


FIFO inventory
 Stores & catalog $5,174 $5,317
 Eckerd drugstores $2,302 $657


(a) Pro forma results assuming the drugstore acquisitions occurred
 effective January 28, 1996.


SOURCE J. C. Penney Company, Inc.
 -0- 11/11/97


/CONTACT: Theda Page Whitehead of J. C. Penney Company, 972-431-4757/

/Photo: http://www.newscom.com/cgi-bin/pub/pd/pdz?f=PRN/prnphotos&grid=2 or NewsCom, 305-448-8411/

(JCP)

CO: J. C. Penney Company, Inc. ST: Texas IN: REA SU: ERN

DG -- NYTU003 -- 1649 11/11/97 07:59 EST http://www.prnewswire.com
COPYRIGHT 1997 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1997 Gale, Cengage Learning. All rights reserved.

 Reader Opinion

Title:

Comment:



 

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Nov 11, 1997
Words:1364
Previous Article:MEDTOX Scientific Reports Third-Quarter and Nine-Month Results
Next Article:Metrotrans Corporation Announces Record Third Quarter Revenues
Topics:

Terms of use | Copyright © 2014 Farlex, Inc. | Feedback | For webmasters