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Share Name | Share Symbol | Market | Type |
---|---|---|---|
J C Penney Company Inc | NYSE:JCP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.1819 | 0 | 01:00:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
26-0037077
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
6501 Legacy Drive, Plano, Texas
|
|
75024 - 3698
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
x
|
Accelerated filer
¨
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In millions, except per share data)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||||||
|
|
|
As Adjusted
|
|
|
|
As Adjusted
|
||||||||
Total net sales
|
$
|
2,653
|
|
|
$
|
2,817
|
|
|
$
|
7,999
|
|
|
$
|
8,503
|
|
Credit income and other
|
80
|
|
|
69
|
|
|
234
|
|
|
235
|
|
||||
Total revenues
|
2,733
|
|
|
2,886
|
|
|
8,233
|
|
|
8,738
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Costs and expenses/(income):
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
|
1,808
|
|
|
1,859
|
|
|
5,351
|
|
|
5,516
|
|
||||
Selling, general and administrative (SG&A)
|
883
|
|
|
920
|
|
|
2,589
|
|
|
2,793
|
|
||||
Depreciation and amortization
|
138
|
|
|
131
|
|
|
419
|
|
|
420
|
|
||||
Real estate and other, net
|
(7
|
)
|
|
2
|
|
|
(13
|
)
|
|
(135
|
)
|
||||
Restructuring and management transition
|
11
|
|
|
52
|
|
|
20
|
|
|
175
|
|
||||
Total costs and expenses
|
2,833
|
|
|
2,964
|
|
|
8,366
|
|
|
8,769
|
|
||||
Operating income/(loss)
|
(100
|
)
|
|
(78
|
)
|
|
(133
|
)
|
|
(31
|
)
|
||||
Other components of net periodic pension cost/(income)
|
(19
|
)
|
|
(2
|
)
|
|
(57
|
)
|
|
90
|
|
||||
(Gain)/loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
23
|
|
|
35
|
|
||||
Net interest expense
|
78
|
|
|
78
|
|
|
235
|
|
|
244
|
|
||||
Income/(loss) before income taxes
|
(159
|
)
|
|
(154
|
)
|
|
(334
|
)
|
|
(400
|
)
|
||||
Income tax expense/(benefit)
|
(8
|
)
|
|
(29
|
)
|
|
(4
|
)
|
|
(40
|
)
|
||||
Net income/(loss)
|
$
|
(151
|
)
|
|
$
|
(125
|
)
|
|
$
|
(330
|
)
|
|
$
|
(360
|
)
|
Earnings/(loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.48
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(1.16
|
)
|
Diluted
|
$
|
(0.48
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(1.16
|
)
|
Weighted average shares – basic
|
316.3
|
|
|
311.6
|
|
|
315.3
|
|
|
310.6
|
|
||||
Weighted average shares – diluted
|
316.3
|
|
|
311.6
|
|
|
315.3
|
|
|
310.6
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||||||
|
|
|
As Adjusted
|
|
|
|
As Adjusted
|
||||||||
Net income/(loss)
|
$
|
(151
|
)
|
|
$
|
(125
|
)
|
|
$
|
(330
|
)
|
|
$
|
(360
|
)
|
Other comprehensive income/(loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Retirement benefit plans
|
|
|
|
|
|
|
|
||||||||
Net actuarial gain/(loss) arising during the period
(1)
|
—
|
|
|
31
|
|
|
—
|
|
|
36
|
|
||||
Reclassification for amortization of prior service (credit)/cost
(2)
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Net curtailment gain
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Net settlement gain
(4)
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
Cash flow hedges
|
|
|
|
|
|
|
|
||||||||
Gain/(loss) on interest rate swaps
(5)
|
5
|
|
|
4
|
|
|
10
|
|
|
(2
|
)
|
||||
Reclassification for periodic settlements
(6)
|
—
|
|
|
1
|
|
|
—
|
|
|
5
|
|
||||
Foreign currency translation
|
|
|
|
|
|
|
|
||||||||
Unrealized (gain)/loss
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
||||
Total other comprehensive income/(loss), net of tax
|
6
|
|
|
43
|
|
|
13
|
|
|
70
|
|
||||
Total comprehensive income/(loss), net of tax
|
$
|
(145
|
)
|
|
$
|
(82
|
)
|
|
$
|
(317
|
)
|
|
$
|
(290
|
)
|
(1)
|
Net of
$(24) million
and
$(28) million
in tax in the three and
nine
months ended
October 28, 2017
, respectively.
|
(2)
|
Net of
$(1) million
and
$(3) million
in tax in the three and
nine
months ended
November 3, 2018
, respectively. Net of
$(2) million
in tax in the nine months ended
October 28, 2017
. Pre-tax amounts of
$2 million
and
$6 million
in the three and
nine
months ended
November 3, 2018
, respectively, and pre-tax amounts of
$1 million
and
$5 million
in the three and
nine
months ended
October 28, 2017
, respectively, were recognized in Other components of net periodic pension cost/(income) in the Consolidated Statements of Operations.
|
(3)
|
Net of
$(11) million
in tax in the
nine
months ended
October 28, 2017
. Pre-tax prior service cost of $5 million related to the curtailment is included in Other components of net periodic pension cost/(income) in the Consolidated Statements of Operations in the
nine
months ended
October 28, 2017
.
|
(4)
|
Net of
$(4) million
of tax in the three and nine months ended October 28, 2017. Pre-tax amounts of $12 million in the three and nine months ended October 28, 2017, respectively, were recognized in Other components of net periodic pension cost/(income) in the Consolidated Statements of Operations.
|
(5)
|
Net of
$(1) million
and
$(2) million
of tax in the three and
nine
months ended
November 3, 2018
, respectively, and net of
$(1) million
and
$2 million
of tax in the three and
nine
months ended
October 28, 2017
, respectively.
|
(6)
|
Net of
$(1) million
and
$(3) million
of tax in the three and
nine
months ended
October 28, 2017
, respectively, and
$2 million
and
$8 million
in pre-tax amounts for the three and
nine
months ended
October 28, 2017
, respectively, were recognized in Net interest expense in the Consolidated Statements of Operations.
|
|
November 3,
2018 |
|
October 28,
2017 |
|
February 3,
2018 |
||||||
(In millions, except per share data)
|
(Unaudited)
|
|
(Unaudited)
|
|
|
||||||
|
|
|
As Adjusted
|
||||||||
Assets
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash in banks and in transit
|
$
|
157
|
|
|
$
|
175
|
|
|
$
|
116
|
|
Cash short-term investments
|
11
|
|
|
10
|
|
|
342
|
|
|||
Cash and cash equivalents
|
168
|
|
|
185
|
|
|
458
|
|
|||
Merchandise inventory
|
3,223
|
|
|
3,406
|
|
|
2,803
|
|
|||
Prepaid expenses and other
|
224
|
|
|
243
|
|
|
190
|
|
|||
Total current assets
|
3,615
|
|
|
3,834
|
|
|
3,451
|
|
|||
Property and equipment (net of accumulated depreciation of $3,371, $3,463 and $3,500)
|
4,005
|
|
|
4,316
|
|
|
4,281
|
|
|||
Prepaid pension
|
100
|
|
|
3
|
|
|
61
|
|
|||
Other assets
|
695
|
|
|
632
|
|
|
661
|
|
|||
Total Assets
|
$
|
8,415
|
|
|
$
|
8,785
|
|
|
$
|
8,454
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Merchandise accounts payable
|
$
|
1,234
|
|
|
$
|
1,342
|
|
|
$
|
973
|
|
Other accounts payable and accrued expenses
|
960
|
|
|
1,081
|
|
|
1,156
|
|
|||
Current portion of capital leases, financing obligation and note payable
|
8
|
|
|
8
|
|
|
8
|
|
|||
Current maturities of long-term debt
|
92
|
|
|
232
|
|
|
232
|
|
|||
Total current liabilities
|
2,294
|
|
|
2,663
|
|
|
2,369
|
|
|||
Long-term capital leases, financing obligation and note payable
|
206
|
|
|
214
|
|
|
212
|
|
|||
Long-term debt
|
4,161
|
|
|
4,039
|
|
|
3,780
|
|
|||
Deferred taxes
|
138
|
|
|
201
|
|
|
143
|
|
|||
Other liabilities
|
542
|
|
|
574
|
|
|
567
|
|
|||
Total Liabilities
|
7,341
|
|
|
7,691
|
|
|
7,071
|
|
|||
Stockholders’ Equity
|
|
|
|
|
|
||||||
Common stock
(1)
|
158
|
|
|
156
|
|
|
156
|
|
|||
Additional paid-in capital
|
4,711
|
|
|
4,701
|
|
|
4,705
|
|
|||
Reinvested earnings/(accumulated deficit)
|
(3,448
|
)
|
|
(3,360
|
)
|
|
(3,118
|
)
|
|||
Accumulated other comprehensive income/(loss)
|
(347
|
)
|
|
(403
|
)
|
|
(360
|
)
|
|||
Total Stockholders’ Equity
|
1,074
|
|
|
1,094
|
|
|
1,383
|
|
|||
Total Liabilities and Stockholders’ Equity
|
$
|
8,415
|
|
|
$
|
8,785
|
|
|
$
|
8,454
|
|
(1)
|
1,250 million shares of common stock are authorized with a par value of $0.50 per share. The total shares issued and outstanding were
315.4 million
,
311.1 million
and
312.0 million
as of
November 3, 2018
,
October 28, 2017
and
February 3, 2018
, respectively.
|
(In millions)
|
Number of Common Shares
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Reinvested Earnings/(Accumulated Deficit)
|
|
Accumulated Other Comprehensive Income/(Loss)
|
|
Total Stockholders' Equity
|
|||||||||||
February 3, 2018 - As Adjusted
|
312.0
|
|
|
$
|
156
|
|
|
$
|
4,705
|
|
|
$
|
(3,118
|
)
|
|
$
|
(360
|
)
|
|
$
|
1,383
|
|
Net income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(78
|
)
|
|
—
|
|
|
(78
|
)
|
|||||
Other comprehensive income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|||||
Stock-based compensation and other
|
2.3
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
May 5, 2018
|
314.3
|
|
|
$
|
157
|
|
|
$
|
4,708
|
|
|
$
|
(3,196
|
)
|
|
$
|
(354
|
)
|
|
$
|
1,315
|
|
Net income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
|
—
|
|
|
(101
|
)
|
|||||
Other comprehensive income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||
Stock-based compensation and other
|
0.5
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
August 4, 2018
|
314.8
|
|
|
$
|
157
|
|
|
$
|
4,709
|
|
|
$
|
(3,297
|
)
|
|
$
|
(353
|
)
|
|
$
|
1,216
|
|
Net income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(151
|
)
|
|
—
|
|
|
(151
|
)
|
|||||
Other comprehensive income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|||||
Stock-based compensation and other
|
0.6
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
November 3, 2018
|
315.4
|
|
|
$
|
158
|
|
|
$
|
4,711
|
|
|
$
|
(3,448
|
)
|
|
$
|
(347
|
)
|
|
$
|
1,074
|
|
(In millions)
|
Number of Common Shares
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Reinvested Earnings/(Accumulated Deficit)
|
|
Accumulated Other Comprehensive Income/(Loss)
|
|
Total Stockholders' Equity
|
|||||||||||
January 28, 2017 - As Adjusted
|
308.3
|
|
|
$
|
154
|
|
|
$
|
4,679
|
|
|
$
|
(3,000
|
)
|
|
$
|
(473
|
)
|
|
$
|
1,360
|
|
Net income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(187
|
)
|
|
—
|
|
|
(187
|
)
|
|||||
Other comprehensive income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
|||||
Stock-based compensation and other
|
1.5
|
|
|
1
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||
April 29, 2017 - As Adjusted
|
309.8
|
|
|
$
|
155
|
|
|
$
|
4,684
|
|
|
$
|
(3,187
|
)
|
|
$
|
(448
|
)
|
|
$
|
1,204
|
|
Net income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
—
|
|
|
(48
|
)
|
|||||
Other comprehensive income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|||||
Stock-based compensation and other
|
0.5
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||
July 29, 2017 - As Adjusted
|
310.3
|
|
|
$
|
155
|
|
|
$
|
4,694
|
|
|
$
|
(3,235
|
)
|
|
$
|
(446
|
)
|
|
$
|
1,168
|
|
Net income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(125
|
)
|
|
—
|
|
|
(125
|
)
|
|||||
Other comprehensive income/(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
43
|
|
|||||
Stock-based compensation and other
|
0.8
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
October 28, 2017 - As Adjusted
|
311.1
|
|
|
$
|
156
|
|
|
$
|
4,701
|
|
|
$
|
(3,360
|
)
|
|
$
|
(403
|
)
|
|
$
|
1,094
|
|
|
Nine Months Ended
|
||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
||||
|
|
|
As Adjusted
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income/(loss)
|
$
|
(330
|
)
|
|
$
|
(360
|
)
|
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
|
|
|
|
||||
Restructuring and management transition
|
(3
|
)
|
|
72
|
|
||
Asset impairments and other charges
|
53
|
|
|
7
|
|
||
Net gain on sale of operating assets
|
(58
|
)
|
|
(119
|
)
|
||
(Gain)/loss on extinguishment of debt
|
23
|
|
|
35
|
|
||
Depreciation and amortization
|
419
|
|
|
420
|
|
||
Benefit plans
|
(56
|
)
|
|
95
|
|
||
Stock-based compensation
|
9
|
|
|
23
|
|
||
Deferred taxes
|
(9
|
)
|
|
(49
|
)
|
||
Change in cash from:
|
|
|
|
||||
Inventory
|
(420
|
)
|
|
(510
|
)
|
||
Prepaid expenses and other
|
(37
|
)
|
|
(66
|
)
|
||
Merchandise accounts payable
|
261
|
|
|
365
|
|
||
Income taxes
|
(2
|
)
|
|
3
|
|
||
Accrued expenses and other
|
(161
|
)
|
|
(99
|
)
|
||
Net cash provided by/(used in) operating activities
|
(311
|
)
|
|
(183
|
)
|
||
Cash flows from investing activities
|
|
|
|
||||
Capital expenditures
|
(321
|
)
|
|
(287
|
)
|
||
Net proceeds from sale of operating assets
|
132
|
|
|
153
|
|
||
Joint venture return of investment
|
3
|
|
|
9
|
|
||
Insurance proceeds received for damage to property and equipment
|
1
|
|
|
—
|
|
||
Net cash provided by/(used in) investing activities
|
(185
|
)
|
|
(125
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
400
|
|
|
—
|
|
||
Proceeds from borrowings under the credit facility
|
3,466
|
|
|
521
|
|
||
Payments of borrowings under the credit facility
|
(3,029
|
)
|
|
(310
|
)
|
||
Premium on early retirement of debt
|
(20
|
)
|
|
(30
|
)
|
||
Payments of capital leases, financing obligation and note payable
|
(6
|
)
|
|
(14
|
)
|
||
Payments of long-term debt
|
(597
|
)
|
|
(552
|
)
|
||
Financing costs
|
(7
|
)
|
|
(9
|
)
|
||
Proceeds from stock issued under stock plans
|
2
|
|
|
4
|
|
||
Tax withholding payments for vested restricted stock
|
(3
|
)
|
|
(4
|
)
|
||
Net cash provided by/(used in) financing activities
|
206
|
|
|
(394
|
)
|
||
Net increase/(decrease) in cash and cash equivalents
|
(290
|
)
|
|
(702
|
)
|
||
Cash and cash equivalents at beginning of period
|
458
|
|
|
887
|
|
||
Cash and cash equivalents at end of period
|
$
|
168
|
|
|
$
|
185
|
|
|
|
|
|
||||
Supplemental cash flow information
|
|
|
|
||||
Income taxes received/(paid), net
|
$
|
(7
|
)
|
|
$
|
(6
|
)
|
Interest received/(paid), net
|
(242
|
)
|
|
(247
|
)
|
||
Supplemental non-cash investing and financing activity
|
|
|
|
||||
Increase/(decrease) in other accounts payable related to purchases of property and equipment and software
|
(29
|
)
|
|
2
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||
|
October 28, 2017
|
|
October 28, 2017
|
||||||||||||||||||||
($ in millions, except per share data)
|
Previously Reported
|
|
As Adjusted
|
|
Effect of Change
|
|
Previously Reported
|
|
As Adjusted
|
|
Effect of Change
|
||||||||||||
Total net sales
|
$
|
2,807
|
|
|
$
|
2,817
|
|
|
$
|
10
|
|
|
$
|
8,475
|
|
|
$
|
8,503
|
|
|
$
|
28
|
|
Credit income and other
|
—
|
|
|
69
|
|
|
69
|
|
|
—
|
|
|
235
|
|
|
235
|
|
||||||
Cost of goods sold (exclusive of depreciation and amortization)
|
1,852
|
|
|
1,859
|
|
|
7
|
|
|
5,498
|
|
|
5,516
|
|
|
18
|
|
||||||
Selling, general and administrative (SG&A)
|
840
|
|
|
920
|
|
|
80
|
|
|
2,525
|
|
|
2,793
|
|
|
268
|
|
||||||
Pension
|
9
|
|
|
—
|
|
|
(9
|
)
|
|
3
|
|
|
—
|
|
|
(3
|
)
|
||||||
Restructuring and management transition
|
52
|
|
|
52
|
|
|
—
|
|
|
295
|
|
|
175
|
|
|
(120
|
)
|
||||||
Operating income/(loss)
|
(79
|
)
|
|
(78
|
)
|
|
1
|
|
|
(131
|
)
|
|
(31
|
)
|
|
100
|
|
||||||
Other components of net periodic pension cost/(income)
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
90
|
|
|
90
|
|
||||||
Income/(loss) before income taxes
|
(157
|
)
|
|
(154
|
)
|
|
3
|
|
|
(410
|
)
|
|
(400
|
)
|
|
10
|
|
||||||
Net income/(loss)
|
$
|
(128
|
)
|
|
$
|
(125
|
)
|
|
$
|
3
|
|
|
$
|
(370
|
)
|
|
$
|
(360
|
)
|
|
$
|
10
|
|
Basic earnings/(loss) per common share
|
$
|
(0.41
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
0.01
|
|
|
$
|
(1.19
|
)
|
|
$
|
(1.16
|
)
|
|
$
|
0.03
|
|
Diluted earnings/(loss) per common share
|
$
|
(0.41
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
0.01
|
|
|
$
|
(1.19
|
)
|
|
$
|
(1.16
|
)
|
|
$
|
0.03
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||
|
October 28, 2017
|
|
October 28, 2017
|
||||||||||||||||||||
($ in millions)
|
Previously Reported
|
|
As Adjusted
|
|
Effect of Change
|
|
Previously Reported
|
|
As Adjusted
|
|
Effect of Change
|
||||||||||||
Net income/(loss)
|
$
|
(128
|
)
|
|
$
|
(125
|
)
|
|
$
|
3
|
|
|
$
|
(370
|
)
|
|
$
|
(360
|
)
|
|
$
|
10
|
|
|
October 28, 2017
|
|
February 3, 2018
|
||||||||||||||||||||
($ in millions)
|
Previously Reported
|
|
As Adjusted
|
|
Effect of Change
|
|
Previously Reported
|
|
As Adjusted
|
|
Effect of Change
|
||||||||||||
Merchandise inventory
|
$
|
3,365
|
|
|
$
|
3,406
|
|
|
$
|
41
|
|
|
$
|
2,762
|
|
|
$
|
2,803
|
|
|
$
|
41
|
|
Other accounts payable and accrued expenses
|
1,056
|
|
|
1,081
|
|
|
25
|
|
|
1,119
|
|
|
1,156
|
|
|
37
|
|
||||||
Reinvested earnings/(accumulated deficit)
|
(3,376
|
)
|
|
(3,360
|
)
|
|
16
|
|
|
(3,122
|
)
|
|
(3,118
|
)
|
|
4
|
|
|
Nine Months Ended
|
||||||||||
|
October 28, 2017
|
||||||||||
($ in millions)
|
Previously Reported
|
|
As Adjusted
|
|
Effect of Change
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income/(loss)
|
$
|
(370
|
)
|
|
$
|
(360
|
)
|
|
$
|
10
|
|
Inventory
|
(511
|
)
|
|
(510
|
)
|
|
1
|
|
|||
Accrued expenses and other
|
(88
|
)
|
|
(99
|
)
|
|
(11
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
($ in millions)
|
November 3, 2018
|
|
October 28, 2017
|
|
November 3, 2018
|
|
October 28, 2017
|
||||||||||||||||||||
|
|
|
|
|
As Adjusted
|
|
|
|
|
|
As Adjusted
|
||||||||||||||||
Women’s apparel
|
$
|
597
|
|
|
23
|
%
|
|
$
|
610
|
|
|
22
|
%
|
|
$
|
1,905
|
|
|
24
|
%
|
|
$
|
2,036
|
|
|
24
|
%
|
Men’s apparel and accessories
|
552
|
|
|
21
|
%
|
|
571
|
|
|
20
|
%
|
|
1,615
|
|
|
20
|
%
|
|
1,718
|
|
|
20
|
%
|
||||
Home
|
357
|
|
|
13
|
%
|
|
414
|
|
|
15
|
%
|
|
1,073
|
|
|
13
|
%
|
|
1,204
|
|
|
14
|
%
|
||||
Women’s accessories, including Sephora
|
329
|
|
|
12
|
%
|
|
364
|
|
|
13
|
%
|
|
1,029
|
|
|
13
|
%
|
|
1,086
|
|
|
13
|
%
|
||||
Children’s, including toys
|
280
|
|
|
11
|
%
|
|
307
|
|
|
11
|
%
|
|
728
|
|
|
9
|
%
|
|
780
|
|
|
9
|
%
|
||||
Footwear and handbags
|
236
|
|
|
9
|
%
|
|
258
|
|
|
9
|
%
|
|
676
|
|
|
8
|
%
|
|
741
|
|
|
9
|
%
|
||||
Jewelry
|
139
|
|
|
5
|
%
|
|
129
|
|
|
4
|
%
|
|
451
|
|
|
6
|
%
|
|
437
|
|
|
5
|
%
|
||||
Services and other
|
163
|
|
|
6
|
%
|
|
164
|
|
|
6
|
%
|
|
522
|
|
|
7
|
%
|
|
501
|
|
|
6
|
%
|
||||
Total net sales
|
$
|
2,653
|
|
|
100
|
%
|
|
$
|
2,817
|
|
|
100
|
%
|
|
$
|
7,999
|
|
|
100
|
%
|
|
$
|
8,503
|
|
|
100
|
%
|
(in millions)
|
November 3, 2018
|
|
October 28, 2017
|
|
February 3, 2018
|
||||||
Gift cards
|
$
|
111
|
|
|
$
|
110
|
|
|
$
|
144
|
|
Loyalty rewards
|
60
|
|
|
73
|
|
|
73
|
|
|||
Total contract liability
|
$
|
171
|
|
|
$
|
183
|
|
|
$
|
217
|
|
(in millions)
|
2018
|
|
2017
|
||||
Beginning balance
|
$
|
217
|
|
|
$
|
228
|
|
Current period gift cards sold and loyalty reward points earned
|
232
|
|
|
289
|
|
||
Net sales from amounts included in contract liability opening balances
|
(75
|
)
|
|
(89
|
)
|
||
Net sales from current period usage
|
(203
|
)
|
|
(245
|
)
|
||
Ending balance
|
$
|
171
|
|
|
$
|
183
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions, except per share data)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||||||
Earnings/(loss)
|
|
|
|
|
|
|
|
||||||||
Net income/(loss)
|
$
|
(151
|
)
|
|
$
|
(125
|
)
|
|
$
|
(330
|
)
|
|
$
|
(360
|
)
|
Shares
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding (basic shares)
|
316.3
|
|
|
311.6
|
|
|
315.3
|
|
|
310.6
|
|
||||
Adjustment for assumed dilution:
|
|
|
|
|
|
|
|
||||||||
Stock options, restricted stock awards and warrant
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average shares assuming dilution (diluted shares)
|
316.3
|
|
|
311.6
|
|
|
315.3
|
|
|
310.6
|
|
||||
EPS
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.48
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(1.16
|
)
|
Diluted
|
$
|
(0.48
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(1.16
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
(Shares in millions)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||
Stock options, restricted stock awards and warrant
|
22.9
|
|
|
32.1
|
|
|
25.8
|
|
|
32.9
|
|
($ in millions)
|
|
November 3, 2018
|
|
October 28, 2017
|
|
February 3, 2018
|
||||||
Issue:
|
|
|
|
|
|
|
||||||
5.75% Senior Notes Due 2018
(1)
|
|
$
|
—
|
|
|
$
|
190
|
|
|
$
|
190
|
|
8.125% Senior Notes Due 2019
(1)
|
|
50
|
|
|
175
|
|
|
175
|
|
|||
5.65% Senior Notes Due 2020
(1)
|
|
110
|
|
|
400
|
|
|
360
|
|
|||
2017 Credit Facility (Matures in 2022)
|
|
437
|
|
|
211
|
|
|
—
|
|
|||
2016 Term Loan Facility (Matures in 2023)
|
|
1,593
|
|
|
1,635
|
|
|
1,625
|
|
|||
5.875% Senior Secured Notes Due 2023
(1)
|
|
500
|
|
|
500
|
|
|
500
|
|
|||
7.125% Debentures Due 2023
|
|
10
|
|
|
10
|
|
|
10
|
|
|||
8.625% Senior Secured Second Priority Notes Due 2025
(1)
|
|
400
|
|
|
—
|
|
|
—
|
|
|||
6.9% Notes Due 2026
|
|
2
|
|
|
2
|
|
|
2
|
|
|||
6.375% Senior Notes Due 2036
(1)
|
|
388
|
|
|
388
|
|
|
388
|
|
|||
7.4% Debentures Due 2037
|
|
313
|
|
|
313
|
|
|
313
|
|
|||
7.625% Notes Due 2097
|
|
500
|
|
|
500
|
|
|
500
|
|
|||
Total debt
|
|
4,303
|
|
|
4,324
|
|
|
4,063
|
|
|||
Unamortized debt issuance costs
|
|
(50
|
)
|
|
(53
|
)
|
|
(51
|
)
|
|||
Less: current maturities
|
|
(92
|
)
|
|
(232
|
)
|
|
(232
|
)
|
|||
Total long-term debt
|
|
$
|
4,161
|
|
|
$
|
4,039
|
|
|
$
|
3,780
|
|
(1)
|
These debt issuances contain a change of control provision that would obligate us, at the holders’ option, to repurchase the debt at a price of 101%.
|
|
Asset Derivatives at Fair Value
|
|
Liability Derivatives at Fair Value
|
||||||||||||||||||||||||
($ in millions)
|
Balance Sheet Location
|
|
November 3, 2018
|
|
October 28, 2017
|
|
February 3, 2018
|
|
Balance Sheet Location
|
|
November 3, 2018
|
|
October 28, 2017
|
|
February 3, 2018
|
||||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate swaps
|
Prepaid expenses and other
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other accounts payable and accrued expenses
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
1
|
|
Interest rate swaps
|
Other assets
|
|
23
|
|
|
—
|
|
|
9
|
|
|
Other liabilities
|
|
—
|
|
|
5
|
|
|
—
|
|
||||||
Total derivatives designated as hedging instruments
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
1
|
|
•
|
Home office and stores
— charges for actions to reduce our store and home office expenses including employee termination benefits, store lease termination and impairment charges;
|
•
|
Management transition
— charges related to implementing changes within our management leadership team for both incoming and outgoing members of management; and
|
•
|
Other
— charges related primarily to contract termination costs and costs related to the closure of certain supply chain locations.
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
Cumulative
Amount From Program Inception Through
November 3, 2018
|
||||||||||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
|
|||||||||||
Home office and stores
|
$
|
2
|
|
|
$
|
52
|
|
|
$
|
11
|
|
|
$
|
173
|
|
|
$
|
484
|
|
Management transition
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
185
|
|
|||||
Total
|
$
|
11
|
|
|
$
|
52
|
|
|
$
|
20
|
|
|
$
|
175
|
|
|
$
|
678
|
|
($ in millions)
|
Home Office
and Stores
|
|
Management
Transition
|
|
Other
|
|
Total
|
||||||||
February 3, 2018
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
41
|
|
Charges
|
14
|
|
|
9
|
|
|
—
|
|
|
23
|
|
||||
Cash payments
|
(30
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
(36
|
)
|
||||
November 3, 2018
|
$
|
18
|
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
28
|
|
•
|
Level 1 — Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 — Significant observable inputs other than quoted prices in active markets for similar assets and liabilities, such as quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
•
|
Level 3 — Significant unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.
|
|
November 3, 2018
|
|
October 28, 2017
|
|
February 3, 2018
|
||||||||||||||||||
($ in millions)
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||||||
Total debt, excluding unamortized debt issuance costs, capital leases, financing obligation and note payable
|
$
|
4,303
|
|
|
$
|
3,157
|
|
|
$
|
4,324
|
|
|
$
|
3,683
|
|
|
$
|
4,063
|
|
|
$
|
3,607
|
|
($ in millions)
|
Net Actuarial
Gain/(Loss)
|
|
Prior Service
Credit/(Cost)
|
|
Foreign Currency Translation
|
|
Gain/(Loss) on Cash Flow Hedges
|
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
||||||||||
February 3, 2018
|
$
|
(330
|
)
|
|
$
|
(26
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(360
|
)
|
Other comprehensive income/(loss) before reclassifications
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
November 3, 2018
|
$
|
(330
|
)
|
|
$
|
(23
|
)
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
(347
|
)
|
($ in millions)
|
Net Actuarial
Gain/(Loss) |
|
Prior Service
Credit/(Cost) |
|
Foreign Currency Translation
|
|
Gain/(Loss) on Cash Flow Hedges
|
|
Accumulated
Other Comprehensive Income/(Loss) |
||||||||||
January 28, 2017
|
$
|
(421
|
)
|
|
$
|
(33
|
)
|
|
$
|
(2
|
)
|
|
$
|
(17
|
)
|
|
$
|
(473
|
)
|
Other comprehensive income/(loss) before reclassifications
|
53
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
51
|
|
|||||
Amounts reclassified from accumulated other comprehensive income
|
8
|
|
|
6
|
|
|
—
|
|
|
5
|
|
|
19
|
|
|||||
October 28, 2017
|
$
|
(360
|
)
|
|
$
|
(27
|
)
|
|
$
|
(2
|
)
|
|
$
|
(14
|
)
|
|
$
|
(403
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||||||
Service cost
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
28
|
|
|
$
|
32
|
|
|
|
|
|
|
|
|
|
||||||||
Other components of net periodic pension cost/(income):
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
34
|
|
|
38
|
|
|
104
|
|
|
114
|
|
||||
Expected return on plan assets
|
(55
|
)
|
|
(53
|
)
|
|
(167
|
)
|
|
(160
|
)
|
||||
Amortization of prior service cost/(credit)
|
2
|
|
|
1
|
|
|
6
|
|
|
5
|
|
||||
Settlement expense
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||
Curtailment (gain)/loss recognized
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||
Special termination benefit recognized
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
||||
|
(19
|
)
|
|
(2
|
)
|
|
(57
|
)
|
|
90
|
|
||||
Net periodic pension expense/(income)
|
$
|
(10
|
)
|
|
$
|
9
|
|
|
$
|
(29
|
)
|
|
$
|
122
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||||||
Investment income from Home Office Land Joint Venture
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
$
|
(23
|
)
|
Net gain from sale of operating assets
|
(1
|
)
|
|
(1
|
)
|
|
(58
|
)
|
|
(119
|
)
|
||||
Impairments
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
||||
Other
|
(3
|
)
|
|
6
|
|
|
(3
|
)
|
|
7
|
|
||||
Total expense/(income)
|
$
|
(7
|
)
|
|
$
|
2
|
|
|
$
|
(13
|
)
|
|
$
|
(135
|
)
|
•
|
Beauty;
|
•
|
Women's apparel business;
|
•
|
Omnichannel; and
|
•
|
Home refresh.
|
▪
|
Total net sales were
$2,653 million
with a total net sales
decrease
of
5.8%
compared to the
third
quarter of
2017
and a comparable store sales
decrease
of
5.4%
.
|
▪
|
Credit income and other was
$80 million
compared to
$69 million
in last year's
third
quarter. The increase was due to increased gain share resulting from improved performance of the credit portfolio.
|
▪
|
Cost of goods sold, which excludes depreciation and amortization, as a percentage of Total net sales
increased
to
68.1%
compared to
66.0%
in the same period last year. The increase as a rate of sales was primarily attributable to the clearance markdowns related to our decision to liquidate slower-moving, excess inventory, during the period.
|
▪
|
Selling, general and administrative (SG&A) expenses as a percentage of Total net sales
increased
to
33.3%
for the
third
quarter of
2018
as compared to
32.7%
for the same period last year. The net
increase
in SG&A expenses as a percentage of Total net sales for the quarter was primarily driven by the decrease in net sales and by higher store controllable costs and marketing spend relative to our sales volume, offset by a reduction in lease expense associated with the amortization of gains on the sales of leasehold interests.
|
▪
|
Our net loss was
$151 million
, or (
$0.48
) per share, compared to a net loss of
$125 million
, or (
$0.40
) per share, for the corresponding prior year quarter. Results for this quarter included the following amounts that are not directly related to our ongoing core business operations:
|
▪
|
$11 million
, or ($0.03) per share, of restructuring and management transition charges;
|
▪
|
$19 million
, or $0.06 per share, for other components of net periodic pension income;
|
▪
|
$3 million
, or $0.01 per share, for our proportional share of net income from our joint venture formed to develop the excess property adjacent to our home office facility in Plano, Texas (Home Office Land Joint Venture); and
|
▪
|
$2 million
, or $0.01 per share, for the tax benefit resulting from other comprehensive income allocation related to pension and interest rate swap activity.
|
▪
|
Adjusted net
loss
was
$164 million
, or ($
0.52
) per share, compared to
an adjusted net loss
of
$108 million
, or ($
0.35
) per share, in last year's
third
quarter. See the reconciliation of net income/(loss) and diluted EPS, the most directly comparable generally accepted accounting principles (GAAP) financial measures, to adjusted net income/(loss) and adjusted diluted EPS on page 27.
|
▪
|
Adjusted earnings before interest expense, income tax (benefit)/expense and depreciation and amortization (Adjusted EBITDA) (non-GAAP) was
$46 million
, a
$56 million
decline
from the same period last year. See the reconciliation of net income/(loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA on page 26.
|
▪
|
We completed a multi-year extension of our private-label and co-branded credit card agreement with Synchrony Bank. The amended and restated agreement provides for improved alignment with respect to the marketing and servicing alliance of the program.
|
▪
|
Effective October 15, 2018, the Board of Directors elected Jill Soltau as Chief Executive Officer of the Company.
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||
($ in millions, except EPS)
|
November 3,
2018 |
|
October 28,
2017 |
(1)
|
November 3,
2018 |
|
October 28,
2017 |
(1)
|
||||||||
Total net sales
|
$
|
2,653
|
|
|
$
|
2,817
|
|
|
$
|
7,999
|
|
|
$
|
8,503
|
|
|
Credit income and other
|
80
|
|
|
69
|
|
|
234
|
|
|
235
|
|
|
||||
Total revenues
|
2,733
|
|
|
2,886
|
|
|
8,233
|
|
|
8,738
|
|
|
||||
Total net sales increase/(decrease) from prior year
|
(5.8
|
)%
|
|
(1.8
|
)%
|
|
(5.9
|
)%
|
|
(1.3
|
)%
|
|
||||
Comparable store sales increase/(decrease)
(2)
|
(5.4
|
)%
|
|
1.7
|
%
|
|
(1.7
|
)%
|
|
(1.0
|
)%
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Costs and expenses/(income):
|
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
|
1,808
|
|
|
1,859
|
|
|
5,351
|
|
|
5,516
|
|
|
||||
Selling, general and administrative
|
883
|
|
|
920
|
|
|
2,589
|
|
|
2,793
|
|
|
||||
Depreciation and amortization
|
138
|
|
|
131
|
|
|
419
|
|
|
420
|
|
|
||||
Real estate and other, net
|
(7
|
)
|
|
2
|
|
|
(13
|
)
|
|
(135
|
)
|
|
||||
Restructuring and management transition
|
11
|
|
|
52
|
|
|
20
|
|
|
175
|
|
|
||||
Total costs and expenses
|
2,833
|
|
|
2,964
|
|
|
8,366
|
|
|
8,769
|
|
|
||||
Operating income/(loss)
|
(100
|
)
|
|
(78
|
)
|
|
(133
|
)
|
|
(31
|
)
|
|
||||
Other components of net periodic pension cost/(income)
|
(19
|
)
|
|
(2
|
)
|
|
(57
|
)
|
|
90
|
|
|
||||
(Gain)/loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
23
|
|
|
35
|
|
|
||||
Net interest expense
|
78
|
|
|
78
|
|
|
235
|
|
|
244
|
|
|
||||
Income/(loss) before income taxes
|
(159
|
)
|
|
(154
|
)
|
|
(334
|
)
|
|
(400
|
)
|
|
||||
Income tax expense/(benefit)
|
(8
|
)
|
|
(29
|
)
|
|
(4
|
)
|
|
(40
|
)
|
|
||||
Net income/(loss)
|
$
|
(151
|
)
|
|
$
|
(125
|
)
|
|
$
|
(330
|
)
|
|
$
|
(360
|
)
|
|
Adjusted EBITDA (non-GAAP)
(3)
|
$
|
46
|
|
|
$
|
102
|
|
|
$
|
302
|
|
|
$
|
541
|
|
|
Adjusted net income/(loss) (non-GAAP)
(3)
|
$
|
(164
|
)
|
|
$
|
(108
|
)
|
|
$
|
(353
|
)
|
|
$
|
(129
|
)
|
|
Diluted EPS
|
$
|
(0.48
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(1.16
|
)
|
|
Adjusted diluted EPS (non-GAAP)
(3)
|
$
|
(0.52
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(1.12
|
)
|
|
$
|
(0.42
|
)
|
|
Ratios as a percent of total net sales:
|
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold
|
68.1
|
%
|
|
66.0
|
%
|
|
66.9
|
%
|
|
64.9
|
%
|
|
||||
SG&A
|
33.3
|
%
|
|
32.7
|
%
|
|
32.4
|
%
|
|
32.8
|
%
|
|
||||
Operating income/(loss)
|
(3.8
|
)%
|
|
(2.8
|
)%
|
|
(1.7
|
)%
|
|
(0.4
|
)%
|
|
(1)
|
Reflects the retrospective application of the changes in accounting for revenue recognition and retirement-related benefits. See Note 2 of Notes to unaudited Interim Consolidated Financial Statements for a discussion of the changes and related impacts.
|
(2)
|
Comparable store sales are presented on a 52-week basis and include sales from all stores, including sales from services, that have been open for 12 consecutive full fiscal months and Internet sales. Stores closed for an extended period are not included in comparable store sales calculations, while stores remodeled and minor expansions not requiring store closure remain in the
calculations. Certain items, such as sales return estimates and store liquidation sales, are excluded from the Company’s calculation. Our definition and calculation of comparable store sales may differ from other companies in the retail industry.
|
(3)
|
See “Non-GAAP Financial Measures” for a discussion of this non-GAAP measure and reconciliation to its most directly comparable GAAP financial measure and further information on its uses and limitations.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||||||
Total net sales
|
$
|
2,653
|
|
|
$
|
2,817
|
|
|
$
|
7,999
|
|
|
$
|
8,503
|
|
Sales percent increase/(decrease):
|
|
|
|
|
|
|
|
||||||||
Total net sales
|
(5.8
|
)%
|
|
(1.8
|
)%
|
|
(5.9
|
)%
|
|
(1.3
|
)%
|
||||
Comparable store sales
|
(5.4
|
)%
|
|
1.7
|
%
|
|
(1.7
|
)%
|
|
(1.0
|
)%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
($ in millions)
|
November 3, 2018
|
|
November 3, 2018
|
||||
Comparable store sales increase/(decrease)
|
$
|
(147
|
)
|
|
$
|
(134
|
)
|
Closed stores and other
|
(17
|
)
|
|
(370
|
)
|
||
Total net sales increase/(decrease)
|
$
|
(164
|
)
|
|
$
|
(504
|
)
|
•
|
Stores increase Internet sales by providing customers opportunities to view, touch and/or try on physical merchandise before ordering online.
|
•
|
Our website increases store sales as in-store customers have often pre-shopped online before shopping in the store, including verification of which stores have online merchandise in stock.
|
•
|
Most Internet purchases are easily returned in our stores.
|
•
|
JCPenney Rewards can be earned and redeemed online or in stores.
|
•
|
In-store customers can order from our website with the assistance of associates in our stores or they can shop our website from the JCPenney app while inside the store.
|
•
|
Customers who utilize our mobile application can receive mobile coupons to use when they check out both online or in our stores.
|
•
|
Internet orders can be shipped from a dedicated jcpenney.com fulfillment center, a store, a store merchandise distribution center, a regional warehouse, directly from vendors or any combination of the above.
|
•
|
Certain categories of store inventory can be accessed and purchased by jcpenney.com customers and shipped directly to the customer's home from the store.
|
•
|
Internet orders can be shipped to stores for customer pick up.
|
•
|
"Buy online and pick up in store" is now available in all of our stores.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||
JCPenney department stores
|
|
|
|
|
|
|
|
||||
Beginning of period
|
865
|
|
|
1,011
|
|
|
872
|
|
|
1,013
|
|
Stores opened
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Closed stores
|
(1
|
)
|
|
(137
|
)
|
|
(9
|
)
|
|
(139
|
)
|
End of period
(1)
|
864
|
|
|
874
|
|
|
864
|
|
|
874
|
|
(1)
|
Gross selling space, including selling space allocated to services and licensed departments, was 95 million square feet as of
November 3, 2018
and 96 million square feet as of
October 28, 2017
.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||||||
Home office and stores
|
$
|
2
|
|
|
$
|
52
|
|
|
$
|
11
|
|
|
$
|
173
|
|
Management transition
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total
|
$
|
11
|
|
|
$
|
52
|
|
|
$
|
20
|
|
|
$
|
175
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
|
November 3,
2018 |
|
October 28,
2017 |
||||||||
Investment income from Home Office Land Joint Venture
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
$
|
(23
|
)
|
Net gain from sale of operating assets
|
(1
|
)
|
|
(1
|
)
|
|
(58
|
)
|
|
(119
|
)
|
||||
Impairments
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
||||
Other
|
(3
|
)
|
|
6
|
|
|
(3
|
)
|
|
7
|
|
||||
Total expense/(income)
|
$
|
(7
|
)
|
|
$
|
2
|
|
|
$
|
(13
|
)
|
|
$
|
(135
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||
($ in millions)
|
November 3, 2018
|
|
October 28, 2017
|
(1)
|
November 3, 2018
|
|
October 28, 2017
|
(1)
|
||||||||
Net income/(loss)
|
$
|
(151
|
)
|
|
$
|
(125
|
)
|
|
$
|
(330
|
)
|
|
$
|
(360
|
)
|
|
Add: Net interest expense
|
78
|
|
|
78
|
|
|
235
|
|
|
244
|
|
|
||||
Add: (Gain)/loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
23
|
|
|
35
|
|
|
||||
Add: Income tax expense/(benefit)
|
(8
|
)
|
|
(29
|
)
|
|
(4
|
)
|
|
(40
|
)
|
|
||||
Add: Depreciation and amortization
|
138
|
|
|
131
|
|
|
419
|
|
|
420
|
|
|
||||
Add: Restructuring and management transition charges
|
11
|
|
|
52
|
|
|
20
|
|
|
175
|
|
|
||||
Add: Other components of net periodic pension cost/(income)
|
(19
|
)
|
|
(2
|
)
|
|
(57
|
)
|
|
90
|
|
|
||||
Less: Proportional share of net income from joint venture
|
(3
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(23
|
)
|
|
||||
Adjusted EBITDA (non-GAAP)
|
$
|
46
|
|
|
$
|
102
|
|
|
$
|
302
|
|
|
$
|
541
|
|
|
(1)
|
Reflects the retrospective application of the changes in accounting for revenue recognition and retirement-related benefits. See Note 2 of Notes to unaudited Interim Consolidated Financial Statements for a discussion of the changes and related impacts. For the three months ended
October 28, 2017
, the retrospective application of the changes in accounting for revenue recognition and retirement-related benefits decreased Adjusted EBITDA (non-GAAP) by $6 million. For the
nine
months ended
October 28, 2017
, the retrospective application of the changes in accounting for revenue recognition and retirement-related benefits decreased Adjusted EBITDA (non-GAAP) by $18 million.
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||
($ in millions, except per share data)
|
November 3,
2018 |
|
October 28,
2017 |
(1)
|
November 3,
2018 |
|
October 28,
2017 |
(1)
|
||||||||
Net income/(loss)
|
$
|
(151
|
)
|
|
$
|
(125
|
)
|
|
$
|
(330
|
)
|
|
$
|
(360
|
)
|
|
Diluted EPS
|
$
|
(0.48
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(1.16
|
)
|
|
Add: Restructuring and management transition charges
(2)
|
11
|
|
|
52
|
|
|
20
|
|
|
175
|
|
|
||||
Add: Other components of net periodic pension cost/(income)
(2)
|
(19
|
)
|
|
(2
|
)
|
|
(57
|
)
|
|
90
|
|
|
||||
Add: (Gain)/loss on extinguishment of debt
(2)
|
—
|
|
|
—
|
|
|
23
|
|
|
35
|
|
|
||||
Less: Proportional share of net income from joint venture
(2)
|
(3
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(23
|
)
|
|
||||
Less: Tax impact resulting from other comprehensive income allocation
(3)
|
(2
|
)
|
|
(30
|
)
|
|
(5
|
)
|
|
(46
|
)
|
|
||||
Adjusted net income/(loss) (non-GAAP)
|
$
|
(164
|
)
|
|
$
|
(108
|
)
|
|
$
|
(353
|
)
|
|
$
|
(129
|
)
|
|
Adjusted diluted EPS (non-GAAP)
|
$
|
(0.52
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(1.12
|
)
|
|
$
|
(0.42
|
)
|
|
(1)
|
Reflects the retrospective application of the changes in accounting for revenue recognition and retirement-related benefits. See Note 2 of Notes to unaudited Interim Consolidated Financial Statements for a discussion of the changes and related impacts. For the three months ended
October 28, 2017
, the retrospective application of the changes in accounting for revenue recognition and retirement-related benefits decreased Adjusted net income/(loss) (non-GAAP) by $6 million. For the
nine
months ended
October 28, 2017
, the retrospective application of the changes in accounting for revenue recognition and retirement-related benefits decreased Adjusted net income/(loss) (non-GAAP) by $18 million.
|
(2)
|
Adjustments reflect no tax effect due to the impact of the Company's tax valuation allowance.
|
(3)
|
Represents the net tax benefit that resulted from our other comprehensive income allocation between our Operating loss and Accumulated other comprehensive income.
|
|
Nine Months Ended
|
||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
||||
Cash and cash equivalents
|
$
|
168
|
|
|
$
|
185
|
|
Merchandise inventory
|
3,223
|
|
|
3,406
|
|
||
Property and equipment, net
|
4,005
|
|
|
4,316
|
|
||
Total debt and other financing obligations
(1)
|
4,467
|
|
|
4,493
|
|
||
Stockholders’ equity
|
1,074
|
|
|
1,094
|
|
||
Total capital
|
5,541
|
|
|
5,587
|
|
||
Maximum capacity under our Revolving Credit Facility
|
2,350
|
|
|
2,350
|
|
||
Cash flow from operating activities
|
(311
|
)
|
|
(183
|
)
|
||
Free cash flow (non-GAAP)
(2)
|
(500
|
)
|
|
(317
|
)
|
||
Capital expenditures
(3)
|
321
|
|
|
287
|
|
||
Ratios:
|
|
|
|
||||
Total debt-to-total capital
(4)
|
81
|
%
|
|
80
|
%
|
||
Cash-to-total debt
(5)
|
4
|
%
|
|
4
|
%
|
(1)
|
Includes long-term debt, net of unamortized debt issuance costs, including current maturities, capital leases, financing obligation, note payable and any borrowings under our revolving credit facility.
|
(2)
|
See “Free Cash Flow” below for a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure and further information on its uses and limitations.
|
(3)
|
As of the end of the
third
quarters of
2018
and
2017
, we had accrued capital expenditures of
$29 million
and
$35 million
, respectively.
|
(4)
|
Total debt and other financing obligations divided by total capital.
|
(5)
|
Cash and cash equivalents divided by total debt and other financing obligations.
|
|
Nine Months Ended
|
||||||
($ in millions)
|
November 3,
2018 |
|
October 28,
2017 |
||||
Net cash provided by/(used in) operating activities (GAAP)
|
$
|
(311
|
)
|
|
$
|
(183
|
)
|
Add:
|
|
|
|
||||
Proceeds from sale of operating assets
|
132
|
|
|
153
|
|
||
Less:
|
|
|
|
||||
Capital expenditures
(1)
|
(321
|
)
|
|
(287
|
)
|
||
Free cash flow (non-GAAP)
|
$
|
(500
|
)
|
|
$
|
(317
|
)
|
|
|
|
|
||||
Net cash provided by/(used in) investing activities
(2)
|
$
|
(185
|
)
|
|
$
|
(125
|
)
|
Net cash provided by/(used in) financing activities
|
$
|
206
|
|
|
$
|
(394
|
)
|
(1)
|
As of the end of the
third
quarters of
2018
and
2017
, we had accrued capital expenditures of
$29 million
and
$35 million
, respectively.
|
(2)
|
Net cash provided by investing activities includes capital expenditures and proceeds from sale of operating assets, which are also included in our computation of free cash flow.
|
|
Corporate
|
|
Outlook
|
Fitch Ratings
|
B
|
|
Stable
|
Moody’s Investors Service, Inc.
|
B3
|
|
Stable
|
Standard & Poor’s Ratings Services
|
B-
|
|
Negative
|
•
|
our ability to gather accurate and relevant data and effectively utilize that data in our strategic planning and decision making;
|
•
|
our ability to respond to any unanticipated changes in expected cash flows, liquidity and cash needs, including our ability to obtain any additional financing or other liquidity enhancing transactions, if and when needed;
|
•
|
our ability to access an adequate and uninterrupted supply of merchandise from suppliers at expected levels and on acceptable terms;
|
•
|
counterparty credit risk;
|
•
|
the risk that the duration or amount of the hedge may not match the duration or amount of the related liability;
|
•
|
the hedging transactions may be adjusted from time to time in accordance with accounting rules to reflect changes in fair values, downward adjustments or “mark-to-market losses,” which would affect our stockholders’ equity; and
|
•
|
the risk that we may not be able to meet the terms and conditions of the hedging instruments, in which case we may be required to settle the instruments prior to maturity with cash payments that could significantly affect our liquidity.
|
•
|
potential disruptions in manufacturing, logistics and supply;
|
•
|
changes in duties, tariffs, quotas and voluntary export restrictions on imported merchandise;
|
•
|
strikes and other events affecting delivery;
|
•
|
consumer perceptions of the safety of imported merchandise;
|
•
|
product compliance with laws and regulations of the destination country;
|
•
|
product liability claims from customers or penalties from government agencies relating to products that are recalled, defective or otherwise noncompliant or alleged to be harmful;
|
•
|
concerns about human rights, working conditions and other labor rights and conditions and environmental impact in foreign countries where merchandise is produced and raw materials or components are sourced, and changing labor, environmental and other laws in these countries;
|
•
|
local business practice and political issues that may result in adverse publicity or threatened or actual adverse consumer actions, including boycotts;
|
•
|
compliance with laws and regulations concerning ethical business practices, such as the U.S. Foreign Corrupt Practices Act; and
|
•
|
economic, political or other problems in countries from or through which merchandise is imported.
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
SEC
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed (†)
Herewith
(as indicated)
|
3.1
|
|
|
10-Q
|
|
001-15274
|
|
3.1
|
|
6/8/2011
|
|
|
|
3.2
|
|
|
8-K
|
|
001-15274
|
|
3.1
|
|
7/21/2016
|
|
|
|
3.3
|
|
|
8-K
|
|
001-15274
|
|
3.1
|
|
8/22/2013
|
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
†
|
10.2
|
|
|
|
|
|
|
|
|
|
|
†
|
|
10.3
|
|
|
8-K
|
|
001-15274
|
|
10.1
|
|
10/2/2018
|
|
|
|
10.4
|
|
|
8-K
|
|
001-15274
|
|
10.2
|
|
10/2/2018
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
†
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
†
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
†
|
|
32.2
|
|
|
|
|
|
|
|
|
|
|
†
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
†
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
†
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
†
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
†
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
†
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
†
|
|
J. C. PENNEY COMPANY, INC.
|
|
|
By
|
/s/Andrew S. Drexler
|
|
Andrew S. Drexler
Senior Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)
|
1 Year J C Penney Chart |
1 Month J C Penney Chart |
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