J.C. Penney Sees Revenue Rise; Net Profit Falls 33%

J.C. Penney Co., the No. 2 U.S. department-store chain, said its fiscal first-quarter sales rose 8.7%, helped by demand for spring dresses and men’s clothing.

Net income fell 33% to $41 million, or 13 cents a share, from $61 million, or 20 cents, a year earlier because of costs from its Eckerd Corp. drugstore chain that is being sold, J.C. Penney said. Sales in the period ended May 1 rose to $4 billion.

Chief Executive Allen Questrom is boosting sales by adding more-fashionable clothing and home goods such as Chris Madden bedding and furniture and expanding jewelry and handbag selections. Questrom, who took over in 2000, has centralized distribution, dropped unprofitable catalogs and remodeled stores to reduce discounts and compete with Kohl’s Corp.

“The company is just about finishing putting into place major strategic moves,” said Howard Gleicher, chief executive of Newport Beach-based Metropolitan West Capital Management. “As these things roll out, we should see continuous improvement in profit and sales growth.”

Excluding Eckerd, profit for the Plano, Texas-based company would have risen to 38 cents a share, from 5 cents a year earlier, J.C. Penney said. On that basis, profit was forecast to be 34 cents, the average estimate of 13 analysts surveyed by Thomson First Call.

J.C. Penney shares rose $2.11, or 7%, to $33.71 on the New York Stock Exchange. They have gained 20% this year.

First-quarter sales at department stores open at least a year -- a key measure of retail health -- rose 9.5%, the fastest pace in more than a decade, J.C. Penney said.

Second-quarter profit, excluding some gains or costs, will be about 6 cents a share, compared with a loss of 3 cents a year earlier, the company said. Analysts were expecting 5 cents, Thomson First Call said.

J.C. Penney said last month that it would sell the struggling Eckerd chain to CVS Corp. and Jean Coutu Group Inc. for $4.53 billion. First-quarter earnings included $77 million in write-downs and results from Eckerd.

* In other earnings, Saks Inc. said its fiscal first-quarter profit climbed 53% as shoppers spent more on luxury goods at its Saks Fifth Avenue stores.

Net income increased to $22 million, or 15 cents a share, from $14.4 million, or 10 cents, a year earlier, the Birmingham, Ala.-based operator of department stores said.

Sales in the period ended May 1 rose 11% to $1.54 billion, the biggest gain in about five years. Sales at stores open at least a year climbed 10%.

Saks Fifth Avenue, the company’s biggest chain, sold more leather handbags, cosmetics, sportswear and jewelry as tax cuts gave consumers more money to spend. The chain and competitors such as Federated Department Stores Inc.’s Bloomingdale’s are offering fewer discounts as the economy improves.

Shares of Saks rose 12 cents to $14.10 on the NYSE.

* TJX Cos. said its fiscal first-quarter profit rose 48% on a better-than-expected performance from its T.J. Maxx and Marshalls stores, a weak dollar and demand for women’s clothing.

The retailer of discounted brand-name clothes and housewares reported earnings of $168 million, or 33 cents a share, for its quarter ended May 1, compared with $114 million, or 22 cents, a year earlier.

Sales increased 20% to $3.35 billion, while sales at stores open at least a year rose 8% from a year earlier.

Shares of Framingham, Mass.-based TJX gained 14 cents to $24 on the NYSE.