J.C. Penney Ends Fiscal Year in the Red
PLANO, Texas-Lower sales, reduced margins and expenses related to the company's transformation of its operations brought J.C. Penney to a net loss of $87 million in the fourth quarter, compared to net income of $271 million in the fourth quarter of last year. This resulted in a net loss for the fiscal year of $152 million, compared to net income of $389 million a year ago.
Net sales in the quarter, which ended on Jan. 28, were down 4.9 percent to $5.4 billion. For the year, net sales slipped 2.8 percent to $17.3 billion. The sales declines were due to the company's exit from its catalog and catalog outlet businesses, along with a drop in Internet sales, which for the fourth quarter fell 3.1 percent.
In addition, gross margin plummeted 740 basis points to 30.2 percent, which occurred due to the drop in sales and the resulting increase in markdown activity. J.C. Penney also reported charges for restructuring and the management transition, and expenses related to implement its new pricing and promotional strategy, which was announced by CEO Ron Johnson in late January and took effect on Feb. 1. Selling, general and administrative expenses decreased 8.3 percent in dollars and 93 basis points as a percentage of sales, to 24.8 percent.
"While 2011 was a year of transition at jcpenney, 2012 will be a year of transformation," Johnson said. "As we embark on this transformation, the strategic changes we are making to our business model will dramatically simplify jcpenney's operations, significantly lower the company's cost structure and create a platform for growth that will result in improved profitability in 2012 and beyond."