Earnings per share jumped 88% to 94 cents from 50cents during last year's third quarter, which was 2cents ahead of the chain's most recent guidance andinline with Wall Street expectations of 92 cents pershare.
"We had a good third quarter," said Ken Hicks,president and chief merchandising officer, during the retailer's third quarter earnings conference call. However, the chain caused some concern on Wall Street with its cautious holiday outlook.
During the third quarter, the chain brought in $4.48billion in sales, up 2% from $3.39 billion for thesame period in 2004. However, analysts were expecting$4.53 billion. Specifically, the chain's internetsales were up 25% during the quarter on top of a 30%increase for the same period last year. Hicks said the company's website "is on track to reach $1 billion in sales."
Operating profit was $401 million, or 8.9% of sales,compared with $342 million, or 7.8% of sales last year--an increase of 17%. Improved operations boosted the chain's gross margin by 110 basis points to 41.8% of sales.
Moreover, same-store sales increased 2.6% during thequarter, which was the 10th consecutive quarter ofsame-store sales increases, according to Hicks.
Hicks said that J.C. Penney is "cautiously optimistic"about holiday performance given that consumers areunder financial pressure from high energy costs andrising interest rates. He noted that the initialresponse to the chain's holiday assortment has beenpositive.
"Our goal is to become America's gift headquarters,"Hicks asserted, adding that the chain has put togethera holiday merchandise mix that focuses on cold weather accessories and spa products, along with a new "energy solutions shop" that will help customers choose gifts such as blankets and throws to keep their heating costs down.
The chain is projecting fourth quarter earnings fromcontinuing operations of approximately $1.58 pershare, according to the earnings release.
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