"This year's 4th quarter was a competitive and emotional period across the industry," said president and chief merchandising officer Ken C. Hicks during this morning's Q4 earnings conference call. However, because customers responded well to Penney's holiday promotions, "we closed the year with our inventory in very good shape," he said.

Though the real estate line item for Q4 reflected a negative swing of $26 million versus the same time in 2007, Hicks pointed out that the figure was resulting from impairments recorded for one existing department store and a real estate joint property.

In 2008, J.C. Penney opened or relocated 35 stores, and has 17 stores planned for a 2009 opening. Additionally, the past year saw what Hicks dubbed "significant fixturing and store environment improvements in 600 stores across the country," that included the additions of in-store Sephora Inside and American Living departments. Furthermore, "we are opening stores, not closing stores, like many of our competitors," Hicks pointed out.

Much of the credit for decent financials was directed toward the company's "Bridge Plan," which had been unveiled last summer with the purpose of controlling expenses in what was becoming a difficult market for retailers. As a result, "we are opening stores, not closing stores like many of our competitors," remarked chairman and CEO Myron E. Ullman III. "Initiatives under the bridge plan are helping us handle the aspects we have control of."

Furthermore, the Penney execs acknowledged they're starting to see an uptick in markets in which other retailers, such as Mervyn's and Linens 'n Things, have closed locations. They did say, however, that it was too soon to judge a quantifiable specific impact on in-store sales.

Also interesting was that, despite the $26 real estate impairment, J.C. Penney's 550 mall locations are still in relatively good health. "We feel very good about them, but we'll continue to be vigilant about most of the mall shops," added executive vice president and chief financial officer Robert B. Cavanaugh. "Still, we have more customers coming into the mall through our doors, than through the mall doors."

Instant Insights /

JCPenney OK Despite Weak Economy

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