Plano, TX, August 10, 2006--J.C. Penney said Thursday that second-quarter profit surged by more than one-third, helped by improving sales of jewelry, accessories and women's apparel.
Penney said it earned $179 million, or $0.76 per share in the quarter ended July 29. It said earnings from continuing operations were $0.75 per share.
Analysts had expected $0.73 per share, according to a survey by Thomson Financial. A year earlier, the company earned $131 million or $0.50 per share.
Revenue rose 6.5 percent, to $4.24 billion, from $3.98 billion a year earlier. The sales results were slightly above the $4.19 billion forecast by analysts.
Same-store sales at locations open at least one year, a key measurement in retailing, rose 6.6 percent in the quarter.
Demand was strong for fine jewelry, children's and women's accessories, and improved for women's apparel, said chairman and chief executive Myron E. Ullman III, in a statement.
The company predicted earnings of $1.07 per share in the third quarter and $1.84 in the fourth quarter--a penny per share above Wall Street's current consensus for both periods--and full-year earnings of about $4.55 per share, a nickel higher than analysts expect.
Same-store sales are expected to rise by low single-digit amounts in the third and fourth quarters, the company said.
Analysts have cautioned that higher energy prices and rising interest rates could crimp consumers' spending on clothing and household goods in the second half of the year.
Ullman said pressures on consumers were forcing his company to take a more conservative view of the second half.
At the same time, he said, Penney has benefited from the disruptions related to rival Federated Department Stores Inc.'s conversion of former May Department Stores Co., stores to Macy's. Macy's aims to try to attract younger and more affluent customers.
"As Macy's-Federated has announced they wanted to move their business slightly up-market, I think that provides an opportunity for May Co. customers, particularly the Marshall Field's, Hecht's, Foley's customer to examine J.C. Penney," Ullman said.
Ullman added that Penney won't abandon its steady schedule of sales in favor of simpler pricing, as some retailers are doing. Penney shoppers like to buy things on sale, he said.
Penney operates more than 1,000 department stores in the United States and Puerto Rico, competing with other mid-priced retailers such as Kohl's Corp., Sears Holding Corp., and Target Corp.
Penney plans to open 25 stores in the third quarter, including 17 outside of malls, and open 50 stores a year starting next year.
