J.C. Penney Beats, Guides Higher

The department store group says it is optimistic but cautious about its future prospects.
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Department store chain

J.C. Penney

's

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first-quarter earnings fell from a year ago because of a charge related to the sale of its Eckerd drugstore unit. Earnings from continuing operations rose by a factor of six, however, thanks to strong sales in both its department stores and catalogs.

The Plano, Texas-based company earned $41 million, or 13 cents a share, in the latest quarter, compared with $60 million, or 20 cents a share, last year. The latest quarter's earnings included a charge of $77 million to write down the value of Eckerd, which is being sold for $4.5 billion to

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and Canada's Jean Coutu Group.

Excluding the Eckerd writedown and the segment's earnings, J.C. Penney earned $118 million, or 38 cents a share, in the latest quarter, compared with continuing-operations earnings of $20 million, or 5 cents a share, a year ago. Analysts surveyed by Thomson First Call were forecasting earnings from continuing operations of 34 cents a share in the 2004 quarter.

First-quarter operating profit was $229 million compared with $84 million last year. Same-store sales at its department and Internet/catalog operations rose 9.5% and 6.5%, respectively, reversing losses in the year-ago period. Revenue rose to $4.03 billion compared with $3.71 billion a year ago.

Going forward, the company said it expects EPS of 6 cents in the second quarter, double that of the year-ago period, with same-store sales growth in the low single digits. The consensus estimate is for 5 cents a share.

"We are optimistic that we will continue to see improvement in the economy and consumer spending. Because we face economic and geopolitical issues, we are planning sales and operating profits conservatively," the company said.

Shares closed at $31.60 Monday.