Penney Q1 Operating Profit Falls

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JC Penney chairman/CEO Allen Questrom said in a statement that he was "disappointed with the company's execution" as it reported plunging first-quarter net income.


First-quarter operating profit in department stores and catalog for the 13 weeks ended April 26 totaled $83 million, down from $157 million in the comparable period ended April 27, 2002. Comparable department store sales fell 4.9 percent, versus a 7.9 percent increase a year ago.


Catalog sales slid 11.1 percent. But Internet sales, which are included in catalog, rose 25 percent in the quarter.


Total retail sales in department stores and catalog fell 7.1 percent from $4.01 billion to $3.72 billion as net income dropped from $86 million to $61 million.


In other news:


* OfficeMax Inc., Cleveland, said sales for its first quarter ended April 26 reached $1.23 billion, with domestic same-store sales up 5 percent. This compares with $1.18 billion in the year-ago quarter. Net income on a generally accepted accounting principles basis was $9.8 million while last year's first-quarter earnings, which benefited from a cash tax refund of $57.5 million, totaled $63.5 million. The company delayed the start of its major TV branding advertising campaign originally set for March because the commercials' upbeat messages would have been inappropriate during the U.S.-Iraq war.


* Hanover Direct Inc., Edgewater, NJ, late Monday reported net income of $200,000 for the 13 weeks ended March 29, versus a net loss of $1.8 million in the comparable period last year. The $2 million increase in net income resulted mainly from a $1.9 million deferred gain related to the June 29, 2001, sale of its Improvements business.


Net revenue fell $7 million, or 6.4 percent, to $102.5 million from $109.5 million. The decrease was attributed mainly to softness in demand and a 2.1 percent reduction in overall circulation for continuing businesses. This reduction resulted from the company's continued efforts to reduce unprofitable circulation and stay focused on its strategy of increasing profitable circulation.


Internet sales continue to rise, and comprised 26.5 percent of combined Internet and catalog revenue in the recently concluded period. Internet sales improved by $6.3 million to $25.5 million from $19.2 million in the comparable fiscal period last year. The company's catalog and Internet portfolio of home fashions, apparel and gift brands include Domestications, The Company Store, Company Kids, Silhouettes, International Male, Scandia Down and Gump's By Mail.


* Abercrombie & Fitch, New Albany, OH, reported that net sales during the 13 weeks ended May 3 increased 11 percent to $346.7 million from $312.8 million in the 13 weeks ended May 4, 2002. Comparable store sales fell 6 percent in the quarter. Net income for the quarter was $25.6 million, up from $23.3 million in the first quarter of fiscal 2002.


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