J.C. Penney Co., Inc. (JCP) Posts Q1 Loss of $1.31/Share; Comps Down 16.6%
J.C. Penney Co., Inc. (NYSE: JCP) reported Q1 EPS of ($1.31), $0.45 worse than the analyst estimate of ($0.86). Revenue for the quarter came in at $2.64 billion versus the consensus estimate of $2.72 billion.
Comparable store sales decreased 16.6 percent for the quarter and were negatively impacted by the ongoing transformation of the home department.
In the first quarter, the Company introduced the Joe Fresh brand with the opening of 681 locations within our stores. During the second quarter, the Company will open a newly designed and merchandised home department featuring new brand partners such as Michael Graves, Jonathan Adler and Sir Terence Conran, among others. Additionally, during the year the Company anticipates opening 60 Sephora inside jcpenney stores, including 30 opened during the first quarter, and ending the year with 446.
For the quarter, gross margin was 30.8 percent of sales, compared to 37.6 percent in the same period last year. Gross margin was negatively impacted by lower than expected sales, a higher level of clearance merchandise sales and a return to some promotional activity towards the end of the quarter. SG&A expenses decreased $82 million compared to last year's first quarter. As a percent of sales, SG&A expenses increased 410 basis points to 40.9 percent of sales. Total non-cash primary pension plan expense was $25 million. As a percent of sales, total operating expenses were 49.3 percent in the first quarter.
For the first quarter, the Company incurred $72 million in restructuring and management transition charges. These charges comprised the following:
* Home office and stores $28 million, or $0.08 per share;
* Store fixtures $28 million, or $0.08 per share;
* Management transition $16 million, or $0.04 per share.
""Our objective is to put jcpenney back on a path to profitable growth. To achieve this, over the past five weeks we have taken critical steps to stabilize the business, including improving our balance sheet and ensuring we have our senior leadership in place," commented CEO Mik Ullman. "With that accomplished, together our team is focused on developing and executing strategies to enable us to reconnect with our customer and improve traffic and sales, while operating with strong financial discipline."
Financial position:
Cash and cash equivalents at the end of the first quarter of 2013 were $821 million, a decrease of $18 million over the same period last year. Total debt at the end of the quarter was $3.826 billion including $850 million outstanding on the revolving credit facility, long-term debt of $2.868 billion and capital leases and notes payable of $108 million. This is approximately $8 million more than previously reported on May 7, 2013.
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