PLANO, Texas–J.C. Penney posted a loss of $1 million in its fiscal second quarter, compared to net income in last year’s second quarter of $117 million.
The retailer’s bottom line was affected by a drop of 8 percent in second-quarter net sales to $3.9 billion, a 24 percent increase in net interest expense, a pension-plan expense of $83 million (as opposed to income from the pension plan of $22 million last year) and a 5.2 percent rise in depreciation and amortization. These factors offset a 2.2 percent slimming down in selling, general and administrative expenses. J.C. Penney’s same-store sales fell 9.5 percent in the quarter.
The quarter’s results were better than expectations, according to a company statement, with a $397 million improvement in free cash flow for the first half of the fiscal year. The company attributed this to the “successful” execution of its Bridge Plan, which was unveiled in April 2008. This plan called for a modest level of new-store openings, discipline over expenses and inventories, maintaining its brands and its commitment to corporate responsibility, accelerating merchandise innovation and intensifying J.C. Penney’s focus on marketing, among other elements.
“J.C. Penney’s financial performance in the second quarter shows that our strategy to navigate the current, very difficult consumer climate is working and will continue to position us well over the near and longer term,” said Myron Ullman III, chairman and chief executive officer.
The second quarter ended on a high note, with the opening of the first J.C. Penney store in Manhattan.
The company said it now expects third-quarter sales to decrease by from 3 percent to 5 percent, with same-store sales down from 5 to 7 percent.