J.C. Penney Boosts Q3 Net 63 Percent, Launches Growth-Brands Division
PLANO, Texas--J.C. Penney reported a 63 percent gain in third-quarter net income as the retailer introduced its new growth-brands division.
The bottom line in the quarter, which ended Oct. 30, was helped by a 4.9 percent reduction in total operating expenses, which included a 3.8 percent decline in selling, general and administrative expenses, along with a 23 percent drop in total pension expenses. Net sales rose just 0.2 percent to $4.2 billion, including a 1.9 percent increase in same-store sales. Gross margin dropped 150 basis points to 39 percent.
The new division "will pursue high-potential opportunities in the retail sector" that will be separate from the core J.C. Penney brand, according to a statement from the retailer. The company has named Anne Sutherland Fuchs, previously a consultant to companies on branding and digital initiatives and a former publishing executive, as group president of digital ventures for the new division. Fuchs will report directly to Myron E. Ullman III, J.C. Penney's chairman and chief executive officer.
The first ventures of the new division, CLAD and Gifting Grace, are collaborations with Hearst Magazines and will be rolled out in summer 2011. Gifting Grace will provide an online gifting resource for women aged from 30 to 54 on its site, giftinggrace.com. CLAD will be an online resource for menswear targeted at men aged 25 to 54.