J.C. Penney Q4 profit drops 5.2%; expects higher sales in 2010

Dallas J.C. Penney Co. reported a 5.2% decline in fourth-quarter earnings, dragged down by a big expense for its pension plan, but the profit topped its own expectations.

Penney’s net income was $200 million in the period ended Jan. 30. That compares with $211 million in last year's fourth quarter. Sales slipped 3.6% to $5.5 billion as shoppers continue to focus on necessities in a tough economy. Same-store sales were down 4.5%.

By reducing inventory for the holiday quarter and sticking to planned promotions, the company boosted its gross profit margin from a year ago, CEO Myron Ullman III said in a statement.

Penney expects 2010 to be a better year, forecasting sales and profit increases, with an expected rise in same-store sales in the low single digits.  Ullman said the chain’s focus for fiscal 2010 is driving top-line growth.

“We intend to deliver positive comparable-store sales and market share growth as we leverage our position as a destination for affordable style and create a sense of discovery and excitement for our customers,” he said.

During the past year, Penney has expanded its assortment of exclusive brands, including a new line called Olsenboye, which made its debut this spring. The line is part of a partnership with actresses Mary-Kate and Ashley Olsen. Starting this fall, Penney will be the only U.S. retailer to sell all the Liz Claiborne lines, except for the Isaac Mizrahi-designed Liz Claiborne New York brand, which goes to QVC.

Penney will announce new long range plan initiatives and financial performance goals for the five-year period ending in 2014 at its analyst meting in New York City on Apr. 20, 2010.