NEW YORK - J.C. Penney stores closing two-pronged strategy making poor and other companies while focusing more on goods exclusive is paying off the coast.
First quarter net income increased by almost 7%, and chain store raised its guidance result Monday.
Increases suggest that middle class of Penney customers are always willing and able to spend as they deal with rising prices for gasoline and groceries, then even that on some clothing prices rises as well.
Penney has cut costs by closing some stores, points of sale and a call centre. He is also a recap of the closure of its catalog business.
The Monday company reported a net income of $ 64 million, or 28 cents per share, for the three months ended April 30. That compares to $ 60 million, or 25 cents per share, in the same period last year.
Revenue edged up to 3.94 billion from $3.93 billion. Penney revenue at stores open at least a year rose 3.8%, fuelled by exclusive brands such as Liz Claiborne, Worthington and MNG by Mango. The gauge is a key indicator of a retailer's health.
Analysts had predicted that earnings of 26 cents on revenue of 3.94 billion, according to FactSet.
CEO Myron e. Ullman III promised savings more, including trimming of the costs of marketing and management of inventory more effectively. The company expects to save about $ 25 million to $ 30 million in 2013, with approximately half of that in 2012.
The company expects $ 5 per share in earnings for 2014.
The beating came after two views shareholders, William Ackman, and Steven Roth, President of Vornado Realty Trust, joins the Board of Directors in January. The Ackman of Pershing Square management and Vornado Realty Trust has taken large stakes in the company of end of last year.
Like many stores, J.C. Penney adding goods exclusive. Last year, he became the only retailer U.S. sale Liz Claiborne and Claiborne women's clothing, although the mark designed by Isaac Mizrahi Liz Claiborne New York went to QVC. He is also the only store selling MNG by Mango, a string of European clothing.
In the first quarter, it added 23 Sephora stores within Penney stores, bringing the total to 254.
Penney also opened a new unit dedicated for new sources of income. This initiative of growth, the company opened the first 10 stores of Foundry Big & Tall Supply co. -six in the Dallas-Fort Worth region and four in Kansas City. The Foundry's website launched in April.
But the operator to store as many retailers to middle-income buyers, faces uncertain position in the second half as shoppers pay more for gasoline and groceries.
During an interview with The Associated Press Monday, said Ullman is seen with shoppers consolidate their travel to the traditional Mall to save gas. Penney stores in malls traditional client traffic is "lukewarm", he said.
Starting this fall, clothing prices expected to increase because of the higher costs of materials such as cotton. That will intensify competition between retailers.
So far Penney had "no difficulty passing along increases in price" for its exclusive high-end modes, according to Ullman. However, when it comes to the basis of the lowest price in its stores, its buyers won't pay more. Penney said he was able to take business away from rivals, which increase the price, more it did.
"Some brands increased their more aggressive price that we have." the gap between their offer and our private brand offers actually increases, which makes our articles more attractive, "he told investors."
The company, however, remains cautious, with plans to order goods from 3% to 4% less than last year.
In the second quarter, Penney expected revenue at stores open at least a year to increase around 3% to 4%.
It provides that the net earnings per share between 20 and 24 cents, including restructuring charges of about 6 cents per share. Analysts predict 22 cents per share, according to FactSet.
The company raised its guidance to a range of $2.15 per share to $2.25 per share. In February, it had provided a range of $2 per share to $2.10 per share. Analysts expected $2.09 per share.
Shares fell to 3.2%, or $1.23 to $37.21 in a broader bond in retail stocks. Richard Jaffe, Stifel Nicolaus analyst, supposed that Penney and other retailers have seen their shares climb coming earnings season, and now, given the liberation good results expected for the moment, investors are profits.
Penney shares have increased 15% since the beginning of the year. Shares are traded on the upper end of their range of 52 weeks of $19.42 to $41.
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