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J.C. Penney Profit Climbs, Beating Forecasts; Outlook Raised

Reuters
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JC Penney

J.C. Penney reported a higher quarterly profit as private-label brands helped margins, and the department store operator raised its full-year earnings forecast.

Shares rose as high as $79.90  .

Earnings increased to $238 million, or $1.04 a share, for Penney's fiscal first quarter, ended May 5, from $210 million, or 89 cents a share, a year earlier.

Analysts on average expected a profit of $1.03 a share.

Sales rose 3.1% to $4.35 billion, below analyst expectations of $4.47 billion. Comparable store sales, a measure of sales at stores open at least a year, rose 2.2%.

Penney, which has been working to shed its dowdy image by offering more fashionable merchandise such as its Ambrielle brand of intimate apparel, kicked off a new branding campaign called "Every Day Matters" earlier this year in hopes of luring new customers and getting current shoppers to spend more money.

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JC Penney Earnings Analysis

Over the next few years, Penney expects results to benefit from 250 new stores, including its first store in New York's Midtown Manhattan, and the roll-out of exclusive brands such as American Living, a line of clothing and home goods by Polo Ralph Lauren Corp.

The company said gross margin improved by 70 basis points to 41.5% of sales, helped by strong sales of its private apparel brands.

For the full-year, the retailer said it expects earnings from continuing operations "in the area" of $5.49 a share, up 5 cents a share from its previous forecast.

Analysts, on average, are expecting full-year earnings of $5.52 a share.