Exhibit 99.1
JCPenney News Release
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CONTACT
Rita Trevino Flynn Tim Lyons Eli Akresh Bob Johnson
Public Relations Public Relations Investor Relations Investor Relations
(972) 431-4753 (972) 431-4834 (972) 431-2207 (972) 431-2217
rflynn@jcpenney.com tmlyons@jcpenney.com eakresh@jcpenney.com rvjohnso@jcpenney.com
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JCPENNEY REPORTS FIRST QUARTER EARNINGS
PLANO, Texas, May 13, 2003 -- J. C. Penney Company, Inc. (NYSE: JCP) today
reported first quarter net income of $0.20 per share compared with $0.29 per
share in last year's quarter.
Allen Questrom, Chairman and Chief Executive Officer said, "The past three
months have represented one of the most difficult retailing environments in
recent memory. Although I am disappointed with the Company's execution, results
for the first quarter should not detract from the significant progress that we
have made in improving the fundamentals of our business over the past two years.
We know that we have many opportunities for further improvement, and our strong
financial condition supports our business initiatives."
Questrom added, "We are beginning to see some signs that the environment
may be improving, and are maintaining our earnings guidance for the second
quarter as well as the back half of the year. If the retail environment does
improve, we believe that we could still achieve our previously communicated full
year earnings guidance."
Department Stores and Catalog
First quarter operating profit was $83 million compared with $157 million
last year, a decrease of 170 basis points as a percent of sales. Comparable
department store sales decreased 4.9 percent compared with a strong 7.9 percent
increase last year. The best merchandise categories for the quarter were Fine
Jewelry and Children's. Catalog sales decreased 11.1 percent. Internet sales,
which are included in Catalog, continued their strong growth trend, increasing
in excess of 25 percent during the quarter.
Department Stores and Catalog gross margin increased by 140 basis points as
a percent of sales, and reflects additional benefits from our growth as a
centralized organization. SG&A expenses were well controlled and increased by
1.5 percent. The increase results from planned investments in advertising and
transition costs for the new distribution network, as well as higher non-cash
pension expense. Spending in these areas was partially offset by expense savings
in store labor, as a result of centralized checkouts and progress made toward
eliminating in-store receiving and lower Catalog expenses.
Eckerd Drugstores
LIFO operating profit was $118 million in this year's first quarter
compared with $100 million last year. Operating profit margin increased by 40
basis points to 3.1 percent of sales as a result of gross margin expansion.
Total drugstore sales increased 1.3 percent. Comparable store sales decreased
1.1 percent during the quarter compared to a 7.6 percent increase last year. On
a comparable store basis, pharmacy sales increased 1.6 percent and non-pharmacy,
or front-end, sales decreased 6.5 percent. Pharmacy sales were negatively
impacted by approximately 450 basis points from the effects of higher generic
dispensing rates and other changes in branded drugs. Front-end sales were
primarily impacted by a weak consumer environment as well as competitor store
openings and a soft tourist market. The best performing front-end categories for
the quarter were over-the-counter products, beverages, and seasonal items.
Gross margin for the quarter increased by 40 basis points as a percent of
sales compared to last year, principally as a result of a lower LIFO charge,
higher generic utilization and improved shrinkage trends. Gross margin for the
quarter includes a LIFO charge of $7 million compared with a charge of $15
million last year. SG&A expenses were well managed and as a percent of sales
were flat with last year.
Other Unallocated
Other unallocated in this year's first quarter was a credit of $7 million.
The credit reflects $21 million of real estate gains on the sale of several
closed stores that more than offset the $14 million of charges principally
associated with the previously announced Catalog restructuring.
Financial Condition
The Company's financial condition continues to be strong. During the
quarter, the Company issued $600 million of long-term debt and securitized an
additional $50 million of Eckerd receivables. At the end of the quarter, cash
investments were approximately $2.6 billion and represented in excess of 40
percent of long-term debt. The Company's financial condition will enable it to
continue to invest in future growth, improve technology, enhance store
environment and provide better customer service.
Senior management will host a live conference call and real-time webcast on
Tuesday, May 13, 2003, beginning at 9:30 a.m. EDT. Access to the conference call
is open to the press and general public in a listen only mode. To access the
conference call, please dial 416-695-5261 and reference the JCPenney Quarterly
Earnings Conference Call. The telephone playback will be available for two days
beginning approximately two hours after the conclusion of the call by dialing
416-695-6030 and entering the ID code 6308. The live webcast may be accessed via
JCPenney's Investor Relations website (at JCPenney.net), or on StreetEvents.com
(for members) and companyboardroom.com (for media and individual investors).
Replays of the webcast will be available for up to 90 days after the event.
J. C. Penney Corporation, Inc., the wholly-owned operating subsidiary of
the Company, is one of America's largest department store, drugstore, catalog,
and e-commerce retailers, employing approximately 230,000 associates. As of
April 26, 2003, the Company operated 1,045 JCPenney department stores throughout
the United States, Puerto Rico, and Mexico, and 54 Renner department stores in
Brazil. Eckerd Corporation operated 2,689 drugstores throughout the Southeast,
Sunbelt, and Northeast regions of the U.S. JCPenney Catalog, including
e-commerce, is the nation's largest catalog merchant of general merchandise. J.
C. Penney Corporation, Inc. is a contributor to JCPenneyAfterschool Fund, a
charitable organization committed to providing children with high quality after
school programs to help them reach their full potential.
This release may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements, which reflect the Company's current views of future events and
financial performance, involve known and unknown risks and uncertainties that
may cause the Company's actual results to be materially different from planned
or expected results. Those risks and uncertainties include, but are not limited
to, competition, consumer demand, seasonality, economic conditions, and
government activity. Investors should take such risks into account when making
investment decisions.