Ullman: J.C. Penney "Well On Our Way" to Turnaround
PLANO, Texas-As CEO Myron Ullman III declared the company closer to its turnaround goals, J.C. Penney posted fourth-quarter net income of $35 million, compared to a net loss in last year's fourth quarter of $552 million.
For the fiscal year ending on Feb. 1, J.C. Penney reported a net loss of $1.4 billion, compared to a net loss of $985 million for the prior fiscal year. Net sales for the quarter were down 2.6 percent to $3.8 billion, bringing the top-line total for the year to $11.9 billion, a decrease of 8.7 percent. Same-store sales in the quarter were up 2 percent, and for the fiscal year, same-store sales declined 7.4 percent.
In a conference call yesterday to financial analysts, Ullman said J.C. Penney has completed the first two of its three phases of turnaround. In the first two phases, the company reinforced relations with suppliers, restored the company's financial position and liquidity, rebuilt the management team and reconfigured its merchandising and marketing strategies. In addition, J.C. Penney invested in inventory for the back-to-school and holiday seasons, brought back key item basics and "popular private brands," edited out unproductive brands and fixed jcp.com by improving assortments, restoring inventory levels and enhancing the online experience.
Ullman described the third phase, which will take place this year, as the "go-forward" phase. Key components of this phase will include remerchandising parts of the store, including home; enhancing the shopping experience; and increasing purchase conversion. In home, Ullman said the company will establish Home Collections of J.C. Penney, which will include a renewal of its focus on bedding, bath, small electrics and decorative accessories.
Fourth-quarter gross margin rose 461 basis points to 28.4 percent. Selling, general and administrative expenses were slashed by 17 percent in dollars and 458 basis points as a percentage of sales, to 26.6 percent.
"We are truly making solid progress, but there is still work to be done," Ullman told the analysts. "Our strategic plan calls for enhanced performance across all key drivers of our business--merchandising, marketing, store experience, jcp.com, our teams and our operations. The goal is to deliver consistently improved financial results and re-establish J.C. Penney as a leader in American retail."