A disastrous holiday season slashed J.C. Penney’s profit by more than half, and the department store said pension costs will spur a worse-than-expected first-quarter loss.
The Plano, Texas-based retailer’s fourth-quarter net income slid 51 percent as the company took heavy markdowns to clear slow-moving holiday fashions. For the quarter ended Jan. 31, Penney earned $211 million, or 95 cents a share, vs. $430 million, or $1.93 a share, a year earlier.
The outlook was even worse. Sales – which plunged nearly 10 percent to $5.76 billion in the fourth quarter – are expected to dive as much as 13 percent for the current quarter as the chain’s middle-class shoppers continue to clamp down on discretionary purchases.
That will help spur a first-quarter loss of 20 to 30 cents a share, steeper than the 19-cent loss Wall Street had been expecting.
But the bigger problem is propping up the company’s employee pension fund, which is expected to cost about 23 cents a share each quarter of this year.
“This is truly a time of survival of the fittest in retailing,” CEO Myron “Mike” Ullman said on a conference call yesterday.
On the bright side, Ullman said Penney is scooping up some of the shoppers left up for grabs by Penney’s less-fit competitors. Several of them – including Linens ‘n Things, Boscov’s and the regional chains Goody’s and Mervyns – have gone bankrupt during the past year.
While women’s clothing remains a weak category, Ullman said Penney is gaining market share with private brands like nicole by Nicole Miller. This spring, Penney will beef up its stable with Allen B. by Allen B. Schwartz and “Heart” Ronson by Charlotte Ronson.
In a sign of the times, Penney said yesterday it has decided to move its annual meeting this year to New York from Texas, citing constrained travel budgets for Wall Street analysts.
Penney shares yesterday rose 18 cents, or 1.2 percent, to close at $15.10. james.covert@nypost.com