J.C. Penney Launches Cost Initiatives
PLANO, Texas-In the wake of a positive first quarter, J.C. Penney has begun efforts to further streamline its operations.
In its statement detailing its first-quarter results, the department-store retailer said it would streamline its operations in its stores, its supply chain and its home office; and implement efforts to optimize its marketing expenses. While it was not specific as to how it would achieve these cost reductions, J.C. Penney said its goal is to deliver expense savings of $50 million in this fiscal year through operational efficiencies, and an additional $25 million to $30 million in savings by 2013 by realigning its supply chain.
The company said the first quarter has brought some progress in these efforts already. J.C. Penney's bottom line grew 6.7 percent to $64 million. The primary driver in this increase was a 0.9 percent reduction in selling, general and administrative-expense dollars, which also slimmed SG&A as a percentage of sales by 39 basis points to 32.5 percent. Myron E. Ullman III, chairman and CEO, said the results reflected the steps J.C. Penney has already taken to control costs, along with merchandising initiatives that brought "strong gains" to its apparel departments.
J.C. Penney's first-quarter net sales edged up 0.4 percent to $3.9 billion, and gross margin fell 103 basis points to 40.5 percent. Both items were affected by the company's exit from its catalog business. Same-store sales rose 3.8 percent in the quarter.