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Penney profits improve
By MARK ALBRIGHT, Times Staff Writer J.C. Penney Co. Inc. and its Eckerd Drug unit on Thursday reported improved performance, but executives are not expecting 2002 to be as profitable as Wall Street had assumed. As a result, JCPenney stock slumped 12 percent on Thursday even as the Plano, Texas, retailer reported results that exceeded analyst projections for the fourth quarter of 2001. JCPenney shares closed at $20.79, down $2.80. The company disclosed it is expecting fiscal 2002 operating earnings to more than double to 85 to 95 cents a share, but Wall Street analysts had been forecasting 96 cents a share. The company also disclosed that decreases in the market value of the company pension plan would cost the company 25 cents a share in projected earnings power in 2002. Still, the executives outlined big strides in turning around the nation's second biggest department store chain and fourth largest drugstore chain. For the quarter that ended Jan. 26, JCPenney reported earnings of $95-million, or 32 cents a share. That was a big improvement over a loss of $580-million, or $1.26 a share, in the year ago quarter. For the year, the company reported earnings of $95-million, or 32 cents a share, compared with a loss of $886-million, or $2.29 a share. During their conference call, officials of Eckerd again disputed allegations in a recently filed class action lawsuit alleging Eckerd's pharmacy computers overbilled some customers by an alleged $100-million. The Fort Lauderdale case subsequently prompted Florida Attorney General Bob Butterworth to open an investigation. "The suit is completely without merit," said Wayne Harris, Chairman and chief executive of the drugstore chain headquartered in Largo. "We are cooperating fully with the attorney general's investigation." The suit filed in Fort Lauderdale alleges Eckerd's computer system overbilled some liquid and ointment prescriptions that came in fractional sizes by rounding them up to whole numbers. Harris said Eckerd billed the correct amounts, but its printers were merely incapable of printing fractions. He said rival chains use the same system. After consumers filed suit Feb. 1, Eckerd's computer system was modified to reflect the actual amounts of medicines in prescriptions, lawyers seeking to represent the chain's customers said in a court filing. At the same time, though, the lawyers say the chain altered drug amounts on prescription records stretching back to 1998. They said that was improper because Florida law requires pharmacists to keep patients' prescription records for at least two years. Harris said the changes were made in installing an upgraded system, a job that was under way months before the suit was filed. JCPenney officials also fumed about recent stock market rumors that exaggerated the size of the lawsuit and other accounting problems. "I find these rumors to be greatly offensive," said Bob Cavanaugh, the company's chief financial officer. Company chairman Allen Questrom blamed short sellers for bad-mouthing the company with bogus information. -- Information from Bloomberg News was used in this report. Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.
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From the Times Business report
From the AP
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