Penney tops 4Q mark, warns
Retailer sees improved results this year that will miss current forecasts.
February 21, 2002: 4:30 p.m. ET
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NEW YORK (CNN/Money) - J.C. Penney Co. reported fourth-quarter results Thursday that topped expectations, but the retailer warned it will miss forecasts for its current fiscal year.
The company earned about $101 million, or 35 cents a share, excluding special items in the quarter ended Jan. 26. Analysts surveyed by earnings tracker First Call had forecast earnings per share of 30 cents, with a range of 28 cents to 33 cents.
The company said the result also topped management expectations for the period. Penney lost 18 cents a share excluding special items in the year-earlier period.
However Penney added that it expects fiscal 2003 earnings per share of 85 cents to 95 cents, below analyst forecasts for a profit of 96 cents this year.
J.C. Penney (JCP: Research, Estimates) stock tumbled nearly 12 percent Thursday, shedding $2.80 to finish at $20.79. Prudential Securities analyst Wayne Hood said investors likely sold the stock on concerns about the warning and a $100 million lawsuit filed in Florida alleging the company's Eckerd drugstore division overcharged for prescriptions. Eckerd said the lawsuit is without merit.
Penney said in a conference call with Wall Street analysts that a drop in noncash income from its pension fund would hurt its 2002 full-year earnings by about 25 cents a share, citing declines in equity markets over the past two years.
Income generated by the company's pension fund investments is included in operating earnings, a Penney spokeswoman told Reuters Thursday.
Total sales were little changed at $9.5 billion for the year. Sales in the department store and catalog division fell 3.4 percent to $5.88 billion, while sales in its Eckerd drugstore segment rose 5 percent to $3.66 billion.
Sales at department stores open at least a year, a closely watched retail measure known as same-store sales, fell 2 percent, while same-store sales at Eckerd rose 8 percent.
Including special items, Penney posted fourth-quarter net income of $95 million, or 32 cents a share, compared with a net loss of $580 million, or $1.26 a share, a year earlier.
The net figure includes a one-time charge of $16 million primarily for the retailer's centralized merchandising process.
Penney is in the midst of a turnaround under Allen Questrom, the former Barney's New York CEO hired two years ago to revive Penney's sagging sales.
Penney has faced increasing competition from discount chains such as Wal-Mart Stores Inc. (WMT: Research, Estimates) and other moderately priced department stores such as Kohl's Corp. (KSS: Research, Estimates), both of which managed to log strong same-store sales in spite of a recession.
At Eckerd, the retailer is redesigning its stores and lowering prices on products like shampoo and cosmetics.
Penney said it expects sales at its department stores open at least a year to rise 2 percent this year, while same-store sales at Eckerd drugstores are forecast to rise in the high single digits on a percentage basis. 
from staff and wire reports
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