JCPenney 2004 Annual Report Download - page 4

J.C. PENNEY COMPANY, INC.2 004 ANNUAL REPORT
2
Income from Continuing Operations
($ in millions)
$800
$700
$600
$500
$400
$300
$200
$100
$-
$285
$364
$667
2002 2003 2004
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$-
$0.95
$1.21
$2.23
2002 2003 2004
Diluted Earnings Per Share - Continuing Operations
2004 ACCOMPLISHMENTS
•Achieved 7.1% operating profit margin, the mid-point of the targeted range of 6% to 8%, one year ahead of plan
• Achieved sales gains for Department Stores and Catalog/Internet:
+ Comparable department store sales increased 5.0%
+ Catalog/Internet sales increased 3.3% excluding sales for the 53rd week in 2003
+Internet sales increased 34.0% excluding sales for the 53rd week of 2003 and jcpenney.com celebrated its 10-year anniversary
•Improved gross margin for the fourth consecutive year
• Leveraged selling, general and administrative expenses
• Generated positive free cash flow for the fifth consecutive year
• Closed on the sale of the Eckerd drugstore operations and received $4.7 billion gross cash proceeds; net cash
proceeds are expected to total $3.5 billion
• Reduced total debt by $1.7 billion
• Returned more than $2.1 billion to stockholders through common stock repurchases and dividend payments
• Experienced a 59% increase in stock price
FINANCIAL HIGHLIGHTS
2004 2003 2002
Operating Results:
Retail sales, net ($ in millions) $ 18,424 $ 17,786 $ 17,633
Comparable department
store sales increase(1) 5.0% 0.9% 2.7%
Catalog/Internet sales
increase/(decrease) 3.3%(2) 1.5%(2) (22.0)%
Operating profit(3) ($ in millions) $ 1,312 $ 790 $ 700
As a percent of sales 7.1% 4.4% 3.9%
Income from continuing
operations ($ in millions) $667 $ 364 $ 285
Diluted earnings per share
from continuing operations $2.23 $ 1.21 $ 0.95
Sales per gross square foot(4) $ 150 $ 143 $ 140
Balance Sheet Data ($ in millions):
Cash and short-term
investments $ 4,687 $ 2,994 $ 2,474
Merchandise inventory $ 3,169 $ 3,156 $ 2,970
Long-term debt, including
current maturities $ 3,923 $ 5,356 $ 5,173
(1) Comparable store sales include the sales of stores after having been open for 12 full consec-
utive fiscal months. New and relocated stores become comparable on the first day of the 13th full
fiscal month. Comparable store sales are presented on a 52-week basis.
(2) Excludes the effect of the 53rd week in 2003. Internet sales increased 34.0% and 47.8% for
those periods. Including sales of $46 million for the 53rd week in 2003, total Catalog/Internet sales
increased 1.5% and 3.3% for 2004 and 2003, respectively.
(3) See definition of operating profit on page 6.
(4) Calculation includes the sales of stores that were open for a full fiscal year as of each year end.
The 2003 calculation excludes sales of the 53rd week.
Operating Profit % of Sales
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
3.9%
4.4%
7.1%
2002 2003 2004