Charges Drag Down Profits at Penney and Woolworth

J. C. Penney & Co.’s earnings fell sharply because of one-time charges against income, and Woolworth Corp. lost money as it recorded a charge to pay for a huge restructuring, the retailers announced Thursday.

Dallas-based Penney’s earnings would have increased 46% for the quarter and fallen 8.5% for the year without the charges. Woolworth’s operations posted a loss for the year and quarter before paying one-time charges, taxes and interest.

After taking a $264-million charge in the 13 weeks ended Jan. 25, Penney reported net income of $37 million, or 25 cents per share, compared to $206 million, or $1.55 per share, in the same period last year.

Revenue increased from $5.53 billion to $5.65 billion.

Without the charge, Penney’s income was $301 million, or $2.28 per share.

For the year, $448 million in charges reduced Penney’s net income to $80 million, or 39 cents per share, compared to $577 million, or $4.33 per share. Revenue slipped from $17.41 billion to $17.3 billion.

Without the charge, annual income was $528 million, or $4 per share.

The total charges of $664 million reflect recognition of post-retirement health care costs, decline in market value of real estate, writeoff of investments in experimental businesses and costs stemming from organizational streamlining and consolidation, the company said.

New York-based Woolworth lost $128 million, or 98 cents per share, on revenue of $3.14 billion in the quarter ended Jan. 25. In the same period a year earlier, the company earned $149 million, or $1.15 per share, on revenue of $3.06 billion.

The quarterly results were depressed by a charge of $250 million, or $1.92 per share, to close some stores and change the format of others. That was partly offset by $35 million because of a change in the company’s method of accounting for inventories.

The company lost $163 million on its operations in the fourth quarter, contrasted with an operating profit of $256 million in the same period a year earlier.

For the year, Woolworth lost $166 million, or $1.28 per share, on revenue of $9.91 billion. That contrasts with a profit of $317 million, or $2.45 per share, on revenue of $9.79 billion for the year ended Jan. 26, 1991.