PLANO, Texas–(BUSINESS WIRE)–J. C. Penney Company, Inc. (NYSE: JCP – News) today reported fiscal second quarter results that reflect the continued successful execution of its Bridge Plan strategy and further improvement in cash flow performance. For the second quarter ended Aug. 1, 2009, the Company reported breakeven earnings of $0.00 per share compared to $0.52 per share in last year’s second quarter. Earnings for this year’s second quarter were impacted by a pre-tax negative swing in non-cash qualified pension plan expense of $106 million, or $0.28 per share after-tax, compared to last year’s second quarter. Net income for this year’s second quarter was a loss of $1 million versus income of $117 million last year.
“JCPenney’s financial performance in the second quarter shows that our strategy to navigate the current, very difficult consumer climate is working and will continue to position us well over the near and longer term. Our stepped up style along with the quality and value that have become synonymous with the JCPenney brand allowed us to compete as one of the strongest anchors in the nation’s malls, where we are customers’ value destination,” said Myron E. (Mike) Ullman, III, chairman and chief executive officer of JCPenney.
“At the same time, our strong financial position enabled us to continue to invest in areas that differentiate JCPenney. These initiatives include opening new stores in key markets such as Manhattan, further expanding our successful Sephora inside JCPenney concept and improving our industry-leading product development and merchandise flow processes. We are also investing in our Associates, which has resulted in higher scores for both Associate engagement and customer service. Within a tough climate, we are focused on winning customers and managing our business to maintain our financial strength.”
In view of its better-than-expected second quarter operating results and expectations for further gross margin improvement in the second half, management has raised its 2009 full year earnings guidance to a range of $0.75 to $0.90 per share. This guidance updates the previous range of $0.50 to $0.65 per share provided with the Company’s first quarter earnings release.
Operating Performance
Total sales in the second quarter decreased 7.9 percent compared to last year, while comparable store sales decreased 9.5 percent. The strongest merchandise results were in shoes and women’s apparel, and geographically, the best performance was in the southwest region of the country. The weakest results were in children’s apparel and in the southeast region.
For the quarter, gross margin increased 100 basis points over last year to 38.5 percent of sales as better alignment of inventory to sales trends resulted in more merchandise sales at regular promotional prices and less selling at clearance prices. SG&A expenses continued to be well managed in the second quarter and decreased $28 million compared to last year’s second quarter, but increased 180 basis points to 31.5 percent of sales due to lower sales volume. Qualified pension plan expense was $73 million compared to a credit of $33 million in last year’s second quarter. As a percent of sales, total operating expenses were 36.8 percent in the second quarter.
Operating income for the second quarter declined 72.4 percent to $67 million or 1.7 percent of sales. Excluding the impact of the non-cash qualified pension plan expense from both the current and last year’s second quarter, adjusted operating income decreased 33.3 percent. A reconciliation of non-GAAP adjusted operating income is included in this release.
Interest expense for the quarter was $68 million, which included approximately $2 million of bond premiums paid in connection with the Company’s debt tender offer for the 8 percent Notes due March 1, 2010 that was completed in May 2009.
Financial Condition
The cash and cash equivalents balance as of the end of the second quarter of 2009 was $2.3 billion, an increase of $69 million over the same period last year. For the first half of 2009, free cash flow improved $397 million compared with last year’s first half. Free cash flow, a non-GAAP measure, is defined as net cash provided by operating activities of continuing operations less capital expenditures and dividends paid, plus proceeds from sales of assets. A reconciliation of free cash flow to the most directly comparable GAAP measure is included in this release.
During the second quarter, long-term debt, including current maturities, was reduced by $113 million to $3.4 billion, principally as a result of the completion of the above-referenced debt tender offer. The Company also made a tax-deductible voluntary contribution of $340 million of JCPenney common stock to its qualified pension plan to further strengthen the plan’s funded status.
2009 Third Quarter Guidance
Management’s 2009 third quarter guidance is as follows:
- Total sales: expected to decrease 3 to 5 percent.
- Comparable store sales: expected to decrease 5 to 7 percent.
- Gross margin rate: expected to increase in a range of 120 to 130 basis points.
- SG&A expenses: expected dollar increase of approximately 4 percent.
- Depreciation and amortization: approximately $127 million.
- Pre-opening expenses: approximately $5 million.
- Interest expense: approximately $66 million.
- Income tax rate: approximately 38 percent.
- Average shares for EPS calculation: approximately 237 million common shares.
- Earnings per share: expected to be in the range of a loss of $0.05 to earnings of $0.05 per share.
2009 Full Year Guidance
Management’s 2009 full year guidance is as follows:
- Total sales: expected to decrease approximately 5.5 to 6.0 percent.
- Comparable store sales: expected to decrease approximately 7.0 to 7.5 percent.
- Gross margin rate: expected to increase in the range of 160 to 180 basis points.
- SG&A expenses: expected to be approximately flat to last year in dollars.
- Income tax rate: approximately 38 percent.
- Average shares for EPS calculation: approximately 233 million common shares.
- Earnings per share: expected to be in the range of $0.75 to $0.90 per share.
NEW ALBANY, Ohio (AP) — Abercrombie & Fitch said Friday it lost money in the fiscal second quarter as sales slumped for the high-priced teen retailer amid the recession and it began closing its Ruehl business.
Loss for the quarter ended Aug. 1 totaled $26.7 million, or 30 cents per share, for the period ended Aug. 1. That compares with profit of $77.8 million, or 87 cents per share, a year ago.
Quarterly results included $24.4 million in charges for the Ruehl closing and store asset impairment charges. The company did not immediately provide a per-share loss excluding the closure.
Analysts forecast a loss of 7 cents per share. Analyst estimates typically exclude one-time items.
New Albany, Ohio-based Abercrombie & Fitch Co. has suffered from keeping prices relatively high as its competitors focused on value amid the recession. The company recently started planning more sales and offering lower entry-level, but that has not stemmed its sales slump.
The operator of namesake stores as well as abercrombie, its children’s apparel brand; surf-themed Hollister; and intimate apparel store Gilly Hicks said sales dropped 23 percent to $648.5 million from $845.8 million a year ago.
Sales in stores open at least one year, a key retail metric known as same-store sales, dropped 30 percent. Same-store sales fell 27 percent at namesake stores, 29 percent at abercrombie stores, 33 percent at Hollister and 31 percent at Ruehl.
The company slashed marketing, general and administrative costs during the quarter, down 19 percent to $88.7 million from $109 million last year, including $600,000 in severance charges related to Ruehl.
The closing of Ruehl, its store focused on handbags and accessories and aimed at older shoppers, should be complete by the end of the fiscal year.
It expects the closing will cost $65 million, including the $23.6 million incurred in the second quarter.
AP Business Writer Michelle Chapman contributed to this report.
PHOENIX–(BUSINESS WIRE)–READY MIX, INC. (RMI) (NYSE Amex:RMX) today announced financial results for the second quarter of 2009.
Second Quarter Results
For the three months ended June 30, 2009, revenue decreased 60.4% to $6.8 million, compared to revenue of $17.1 million for the second quarter of 2008. Cubic yards of concrete sold decreased 56.1% for the second quarter of 2009 compared to the same period of 2008, while average unit sales price decreased 13.5%.
Gross loss for the second quarter of 2009 was $1.9 million. This compares to gross profit of $0.3 million for the second quarter of 2008.
Non-cash depreciation and amortization expense was $1.1 million for the second quarter of 2009 and $1.2 million for the second quarter of 2008.
The net loss for the second quarter of 2009 was $1.8 million, or $0.47 per basic and diluted share. This compares to a net loss for the second quarter of 2008 of $0.5 million, or $0.12 per basic and diluted share.
“While the pace of declines in residential construction in metropolitan Las Vegas, Nevada and Phoenix, Arizona has moderated somewhat, residential construction nevertheless was down sharply in the second quarter compared to prior year. Continued weakness in the non-residential market, which typically lags the residential market, exacerbated the negative impact on our business. Our strategy is to continue providing the first-class service and support our customers expect from RMI, even as we closely manage our costs and liquidity in preparation for improved business conditions in the future,” said Chief Executive Officer Bradley Larson.
As announced on June 17, 2009, the Company engaged the services of Lincoln International LLC to evaluate and advise the Board of Directors regarding strategic alternatives to enhance shareholder value, including the potential sale of the Company. The implementation of any strategic alternative would be subject to, among other things, the results of the Board’s evaluation of strategic alternatives, obtaining Board and stockholder approvals of any proposed transaction, and customary conditions to the closing of any proposed transaction. Accordingly, there is no assurance that the review of strategic alternatives will result in the Company pursuing any particular transaction, or, if it pursues any such transaction, that it will be completed. No further public comment is expected regarding the review until the Board of Directors has approved a specific transaction or otherwise deems disclosure of significant developments appropriate.
First Half Results
For the six months ended June 30, 2009, revenue decreased 52.9% to $15.5 million, compared to $32.9 million for the first six months of 2008. Cubic yards of concrete sold decreased 48.6% for the first half of 2009 versus the same period last year, while average unit sales price decreased 12.2%.
The net loss for the first six months of 2009 was $3.3 million, or $0.87 per basic and diluted share. This compares to a net loss for the first six months of 2008 of $1.1 million, or $0.29 per basic and diluted share.
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