National Jeweler Network

Financial Reporting

Earnings roundup: JC Penney, Target, more

February 27, 2014

New York--Both J.C. Penney and T.J. Maxx/Marshalls recorded same-store sales increases in the fourth quarter while Target’s quarterly comps fell in the wake of the massive data breach that impacted millions of customers.

For struggling J.C. Penney, the 2 percent increase in fourth quarter comps, spurred by a 3 percent increase in November-December sales, represented “solid progress despite (a) challenging retail environment,” and the company’s CEO stated that the most “challenging and expensive” parts of the company’s turnaround are now behind them.

Target, meanwhile, is dealing with soft sales that weren’t helped when hackers got into its computer systems during the holiday shopping season and stole the credit card data of millions of customers nationwide. WWD reported Wednesday that the pressure is mounting on Target’s CEO to fix what ails the retailer.

Below are highlights from the financial results released Wednesday by all three retailers, which are among the nation’s largest sellers of fine jewelry.

J.C. Penney
Same-store sales increased 2 percent year-over-year in the fourth quarter ended Feb. 1 while total sales fell 3 percent, from $3.88 billion to $3.78 billion. Online sales climbed 26 percent year-over-year.

The company said its best-selling categories were home, men’s apparel, women’s accessories and its in-store Sephora shops. 

Operating loss fell from $745 million to $138 million during the quarter.

For the full year, results were not as strong. Same-store sales declined 7 percent while total sales fell from $12.99 billion to $11.86 billion, a 9 percent drop. Internet sales were up 6 percent year-over-year.

Operating loss increased from $1.31 billion to $1.42 billion.

Commenting on the retailer’s results, CEO Myron Ullman III said “J.C. Penney achieved what it set out to do on a number of important fronts in 2013. We stabilized our business, both financially and operationally, and restored our process disciplines, promotions, inventory levels and focus on the customer. As a result, we generated positive comparable store sales in the fourth quarter and ended the year with more than $2 billion in total available liquidity. These important accomplishments reflect the progress we have made in our turnaround, which remains on course heading into 2014.”

For 2014, J.C. Penney said it expects same-store sales to increase in the mid-single digits, a significant improvement in gross margin and to have more than $2 billion in liquidity by year’s end.

Target Corp.
Fourth quarter same-store sales in the U.S. fell 3 percent year-over-year for Target, dragged down by the late November theft of millions of guests’ credit and debit card data. Total sales dropped 7 percent, from $22.4 billion to $20.9 billion.

RELATED CONTENT: 40M could be impacted by Target data breach

Gross margin slipped slightly, from 27.8 percent to 27.6 percent, due in part to clearance markdowns.

For the year, U.S. same-store sales were down 0.4 percent year-over-year while total sales declined 0.9 percent, from $72 billion to $71.3 billion. Full-year gross margin rate was up slightly, from 29.7 percent to 29.8 percent.

Target opened stores in Canada in 2013 but not until later in 2013, so those stores’ results are not included in the retailer’s year-over-year comparisons.

“During the first half of the fourth quarter, our guest-focused holiday merchandising and marketing plans drove better-than-expected sales. However, results softened meaningfully following our December announcement of a data breach,” said Gregg Steinhafel, Target’s chairman, president and CEO.

He added that the retailer is “encouraged” by the sales trends it has seen in recent weeks.

T.J. Maxx
U.S. same-store sales rose 3 percent year-over-year in the fourth quarter ended Feb. 1 for T.J. Maxx and Marshalls stores, parent company The TJX Companies Inc. said. Total sales in the period were up less than one percent, increasing from $4.99 billion to $5.01 billion.

For the fiscal year, U.S. same-store sales for T.J. Maxx and Marshalls were up 3 percent while total sales rose from $17.01 billion to $17.93 billion, a 5 percent increase.

As whole, the company, which also operates T.J. Maxx stores in Europe and Canada as well as HomeGoods stores, reported a 3 percent year-over-year increase in same-store sales in the fourth quarter while total sales rose 1 percent from $7.72 billion to $7.80 billion.

For the full year, same-store sales were up 3 percent while total sales climbed 6 percent from $25.89 billion to $27.42 billion. 

“In the U.S., Marmaxx and HomeGoods continued their excellent, consistent performance. We also successfully launched TJMaxx.com,” said CEO Carol Meyrowitz. “We delivered these results in a competitive retail environment and despite generally unfavorable weather in many of our regions during the first and fourth quarters. We believe this speaks to the resiliency and flexibility of our off-price model.”

The retailer anticipates same-store sales growth of 1 to 2 percent for the first quarter and fiscal year.