J.C. Penney Sees December Comps Decline 7.5%

J. C. Penney Company, Inc. stated that its December sales continued to be impacted by a challenging consumer environment. In addition, sales across all channels were affected by the calendar shift resulting from last year’s 53rd week that moved a week of pre-holiday shopping into this year’s November reporting period.
 
Comparable department store sales decreased 7.5% for the five weeks ended Jan. 5, 2008, compared with guidance for a mid-single digit decrease and a 2.6% increase in last year’s December period. Total department store sales decreased 4.5% for the five weeks. The best performing merchandise categories in December were seasonal gift items across all divisions, housewares in the home division, family shoes and women’s apparel, with the weakest being fine jewelry and big-ticket home categories. Geographically, the best performances were in the northwest and southwest regions of the country, with softer results in the northeast and central regions.

Internet sales through jcp.com increased 12.2% for the nine-week November and December period, but decreased 5.1% for the month, compared to a 15.2% increase last year. Total Direct sales decreased 12.9% compared with guidance for a decrease in the mid-teens and a 1.4% decrease last year. The company continued to see good response to its Christmas book, with the best performing merchandise category being women’s apparel.

Sales and Earnings Outlook

The company guidance for January is for a mid-single digit decline in both comparable department store sales and Direct sales on a 4-week basis, compared to a 3.6% increase and a 1.5% decrease, respectively, in last year’s January period. For reference, total sales reported in last year’s January period included about $200 million in department store sales and about $50 million in Direct sales from the 53rd week.

For the fourth quarter, comparable department store sales are now expected to decrease mid-single digits, and Direct sales are now expected to decrease low-single digits on a 13-week basis. In last year’s fourth quarter, comparable department store sales increased 2.2% and Direct sales decreased 1.2%.

Based on actual sales results for the November and December periods and the above guidance for January, the company now expects fourth quarter earnings to be at the lower end of its previous guidance of $1.65 to $1.80 per share.