Sales slump continues at Penney's

By MARK ALBRIGHT

© St. Petersburg Times, published May 17, 2000

Losses at J.C. Penney Co. Inc. mounted for a third consecutive quarter because of a continuing sales malaise in its department stores and the previously announced closing of 277 unprofitable Eckerd Drug stores.

The Plano, Texas, retailer reported a loss of $118-million, or 48 cents a share, Tuesday for the quarter ended April 29. That performance compared with net income of $167-million, or 61 cents, in the year-ago quarter. Revenues were $7.7-billion, up from $7.5-billion.

The store closings were just one element of a broad plan to put long-ailing J.C. Penney Co. back on track. In recent weeks, the company has hired a new advertising agency, overhauled the way it chooses merchandise and disclosed it may sell a profitable life insurance and membership services unit. Also, chairman and chief executive James Oesterreicher, who presided over the company as its stock lost $15-billion in value, said he will retire early, opening the door for new blood in the company's executive suite.

Closing about 10 percent of Largo-based Eckerd's stores was part of the plan. Doing so accounted for $30-million of Penney's first-quarter loss.

Eckerd sales rose 6.9 percent in stores open more than a year, but earnings in Eckerd pharmacies continued to shrink under pricing pressure from health insurance companies that pay for most prescriptions. Overall revenues at Eckerd dropped to $558-million from $641-million because the company had fewer stores.

JCPenney's online sales jumped to $47-million, up from $6-million in the year-ago quarter. But sales in JCPenney stores open more than a year were down 3.1 percent.

"We do not expect a meaningful pickup in sales until the first quarter of 2001," said Vanessa Castagna, the former Wal-Mart merchandise executive who was brought in last year to pep up Penney's sales performance.

Shares in Penney's stock closed Tuesday at $18.38, up 38 cents.

© St. Petersburg Times. All rights reserved.