A Trendier Quarter for J.C. Penney: Fool by Numbers

On May 17, J.C. Penney (NYSE: JCP) released first-quarter earnings for the period ended May 5.

• The success of newer private brands such as a.n.a. and east5th women's apparel, along with two new concepts from Liz Claiborne (NYSE: LIZ), contributed to a 16.9% increase in profit.
• Internet sales from JCP.com continued to act as the company's fastest-growing channel as online sales increased 18%.
• Enhanced inventory management and better product flow to stores improved gross margins 70 basis points as the company continues to turn around operations.
• While the retail market remains a challenge, the company exceeded its expectations for the first quarter and has raised guidance $0.05 for the year to $5.49 earnings per share.

(Figures in millions, except per-share data.)

Income Statement Highlights

	Q1 2007	Q1 2006	Change
Sales	$4,350	$4,220	3.1%
Net Profit	$238	$210	13.3%
EPS	$1.04	$0.89	16.9%
Diluted Shares	228.8	236.3	(3.2%)

*Income from continuing operations.

 Get back to basics with the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
Gross Margin	41.5%	40.8%	0.7
Operating Margin	9.6%	9.1%	0.6
Net Margin	5.5%	5%	0.5

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$3,068	$2,791	9.9%
Inventory*	$3,497	$3,355	4.2%

Liabilities	Q1 2007	Q1 2006	Change
Accounts Payable**	$2,827	$2,424	16.6%
Long-Term Debt	$3,706	$3,116	18.9%

*Excludes LIFO reserves of $8 and $24
**Includes accrued expenses

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q1 2007	Q1 2006	Change
Cash From Ops.	($29)	($119)	N/A
Capital Expenditures	$244	$126	93.7%
Free Cash Flow	($273)	($245)	N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

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J.C. Penny maintains a middle-of-the-road three out of five stars in the Motley Fool CAPS online community. Join the ranks of more than 28,000 rated investors to rate your favorite -- or least favorite --stocks.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.