J. C. Penney Company announced financial results for its fiscal fourth quarter and full year ended January 30, 2016. Comparable store sales grew 4.1% for the fourth quarter and 4.5% for the full year.
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This combination of strong sales growth, accelerated gross margins and disciplined expense reduction resulted in full year adjusted EBITDA of $715 million, a $435 million increase.
For the fourth quarter, which included a successful holiday season, JCPenney reported net sales of $4 billion compared to $3.9 billion in the fourth quarter of 2014. Comparable store sales rose 4.1% for the quarter.
Home, Sephora, Footwear, and Handbags were the Company's top performing merchandise divisions during the quarter. Geographically, all regions delivered comp sales gains over the same period last year with the best performance in the western and northeastern regions of the country.
For the fourth quarter, gross margin improved 30 basis points to 34.1% of sales. This acceleration was driven by improvements in our clearance and promotional selling margins.
SG&A expenses for the quarter were down $70 million to $962 million, or 24.1% of sales, representing a 240 basis point improvement from last year. These savings were primarily driven by lower controllable costs, more efficient advertising spend and reduced corporate overhead.
Adjusted EBITDA for the quarter was $381 million, a $108 million or 40% improvement from the same period last year.
Adjusted earnings per share were $0.39, after excluding charges associated with primary pension plan expense, restructuring costs and the loss on extinguishment of debt. Adjusted net income was $121 million, an improvement of $108 million or 831%.
Full year results
For the full year 2015, JCPenney reported net sales of $12.6 billion compared to $12.3 billion in 2014, a 3.0% increase. Comparable store sales rose 4.5% for the year.
For the year, gross margin increased 120 basis points to 36.0% from 34.8% in the prior year. SG&A decreased $218 million or 270 basis points compared to the prior year.
Adjusted EBITDA was $715 million, a $435 million or 155% improvement from last year.
Adjusted net loss improved $463 million to $315 million, or $(1.03) per share for the year.
Free cash flow was positive $131 million, an increase of over $74 million or 130% from last year. For the full year, liquidity improved $900 million, of which $500 million was used to pay down debt during the fourth quarter. At year end, liquidity was $2.5 billion compared to $2.1 billion last year.
A reconciliation of GAAP to non-GAAP financial measures is included in the schedules accompanying the consolidated financial statements in this release.
JCPenney's 2016 full year guidance is: comparable store sales expected to increase 3% to 4%; gross margin expected to increase 40 to 60 basis points versus 2015; SG&A dollars expected to decrease versus 2015;
EBITDA expected to be $1 billion; adjusted earnings per share expected to be positive; and free cash flow expected to improve versus 2015. ■