J.C. PENNEY REPORTS 46.0 PERCENT INCREASE IN
FOURTH QUARTER OPERATING RESULTS
DALLAS, Feb. 27 /PRNewswire/ -- J.C. Penney Company, Inc. (NYSE: JCP) reported today that net income before nonrecurring items for the fourth quarter was $301 million, or $2.28 per share, an increase of 46.0 percent from $206 million, or $1.55 per share, in the same l990 quarter. This result compares favorably with the record l989 fourth quarter earnings and reflects improved margins and reduced expenses.
Net income before nonrecurring items for the 12 months ended Jan. 25, l992, was $528 million, or $4.00 per share, as compared with $577 million, or $4.33 per share, in the same l990 period.
As previously announced, the company recorded a one-time, pre-tax charge to earnings of $695 million in l99l. The charge reflects the recognition of post retirement health care costs, the decline in market value of real estate, the write-off of investments in experimental businesses and costs associated with organizational streamlining and consolidation. The charge will have no significant effect on cash flow. Including the effect of these nonrecurring items, the company had net income of $37 million, or 25 cents per share, for the fourth quarter, and $80 million, or 39 cents per share, for the year.
Gross margin dollars on a first-in, first-out (FIFO) basis improved in the fourth quarter over the previous year's period due to increased retail sales and merchandise offerings at more affordable prices. For the twelve month period, FIFO gross margin decreased because of increased promotional activity in the first half of the year. On a LIFO basis, gross margin improved substantially in the fourth quarter but declined slightly for the entire year.
In l99l, the company elected to apply an internally developed LIFO index (rather than one prepared by the U.S. government for all department stores) to measure more accurately the amount of inflation or deflation in J.C. Penney retail prices. Because of the shift to more affordable retail prices, there has been deflation in the company's LIFO index in l99l. As a result, there was a LIFO credit of $116 million in the fourth quarter and $91 million for the full year.
Selling, general and administrative expenses (SG&A) declined from l990 levels by 1.6 percent in the fourth quarter and by 1.5 percent for the full year. This reflects the company's efforts to reduce costs across all operating and support areas. SG&A expenses, as a percent of retail sales, decreased for the quarter and for all of l99l.
Other businesses recorded substantial income gains for the fourth quarter and full year. The life and health insurance operations achieved record levels of premium income and profitability in both periods.
Commenting on the results, Chairman William R. Howell said, "Pre-tax income before nonrecurring items increased 73.5 percent in the fourth quarter and 3.8 percent for the full year in a very difficult retail environment." The effective income tax rate increased to 40.1 percent in the fourth quarter and to 38.8 percent for the full year from 28.8 percent and 30.6 percent, respectively, in the same periods last year, due largely to the expiration of tax benefits on installment sales. The tax rates were also impacted by increases in state and local income tax rates.
Commenting on the outlook, Howell said, "Our merchandise offerings are now closely aligned with what today's value-conscious shopper is looking for: a well-balanced mix of both basic value items and affordably-priced fashion merchandise. We have fine-tuned our merchandise assortments to enhance our positioning as a national department store." He added, "Given continued improvement in the economic environment, JCPenney should elicit a positive response from consumers in l992."
J.C. PENNEY COMPANY, INC. AND SUBSIDIARIES
Summary of Operating Results
(Amounts in millions except per share data)
13 weeks 52 weeks
1/25/92 1/26/91 Inc. 1/25/92 1/26/91 Inc.
Retail sales $5,375 $5,260 2.2 $16,201 $16,365 (1.0)
revenue 160 170 (5.4) 647 674 (3.9)
Other revenue 118 98 20.6 447 371 20.5
Total revenue 5,653 5,528 2.3 17,295 17,410 (0.7)
Margins and exp.
FIFO gross margin 1,652 1,598 3.3 5,269 5,445 (3.2)
LIFO credit (chg) 116 (14) 91 (49)
LIFO gross margin 1,768 1,584 11.6 5,360 5,396 (0.7)
expenses (1,378) (1,399)(1.6) (4,924) (4,999) (1.5)
Profits of other
businesses 31 16 88 62 42.4
net (79) (81)(1.6) (308) (301) 2.5
items 502 290 73.5 863 832 3.8
Income taxes, excl.
nonrecurring items (201) (84) (335) (255)
Net income before
items $301 $206 46.0 $528 $577 (8.5)
benefits, net (264) -- (448) --
Net income $37 $206 (82.2) $80 $577 (86.2)
Earnings per share
Net income before
items $2.28 $1.55 $4.00 $4.33
Net income $.25 $1.55 $.39 $4.33
Primary 116.8 117.2 116.8 118.2
Fully diluted 128.4 128.8 128.4 129.9
FIFO gross margin
retail sales 30.7 30.4 32.5 33.3
LIFO gross margin
retail sales 32.9 30.1 33.1 33.0
retail sales 25.6 26.6 30.4 30.6
tax rate 40.1 28.8 38.8 30.6
serviced -- -- $ 4,410 $ 4,823
FIFO inventory -- -- $ 3,211 $ 3,062
/CONTACT: Duncan Muir of J.C. Penney, 214-591-1329/
(JCP) CO: J.C. Penney Company Inc. ST: Texas IN: REA SU: ERN SM -- NY013 -- 3130 02/27/92 09:33 EST