J.C. Penney Co., Inc., the nation's third largest retailer, will expand its position in the Washington market significantly in the near future.
Company chairman Donald V. Siebert today said that negotiations are nearning completition on sites for four new full-line department stores in the Metropolitan area, although no plans for downtown expansion are being considered.
Penny's president Walter Neppl andded that the major expansion of the Springfield store also is planned. Both said the difficulties in entering establish castern markets where for new locations are available had delayed Penney's expansion in the Washington area.
The executives made their comments following a restrained shared holders meeting which was dominated by the ubiquitious corporate gadfly, Evelyn Y. Davis.
At the 90 minutes session, Sicbert announced flat first'quarter carnings of $29.9 million (46 cents a share). Last year's net income was $29.9 million (47 cents) on 1.3 million fewer, shares outstanding.
While he termed the result for the period ended April 30 "dispointing," Siebert said it was virtually immpossible to top the unprecedented 478-4 per cent profit gain recorded in the first quarter that year. Penney's first-quarter sales were up 7.4 per cent to a record $1.86 million from $1.73 million a year ago.
Siebert cited the pressures of higher personnel cost and fixed overhead costs as well as an increase in leading rates as the factor which curbed earnings. He said Penney's interest expense on borrowing jumped 17.9 per cent from the 1976 level. Continued losses suffered by its discount Treasury stores last year may be overcome in 1977, he said. He noted the "encouraging" 4.2 per cent sales gain for the Treasury division in the first quarter as evidence of a turnaround.
The chirman said the improvement in the nation's consumer spending this quarter was not shared proportionately by all sectors of the economy - while auto sales leapt 60 per cent, apparel gained only 1 per cent. He said retail chain's sales for the balance of 1977 should increase by 9 or 10 per cent.
A substantial portion of his formal presentation - and Davis' questions - focused on investigations by the company and federal government of kickbacks allegedly paid by two former Penney officials to a New York construction firm.
The disclosure earlier this year that senior vice president and company director Kenneth S. Axelson had been questioned by a federal grand jury for alleged underpayment at the same construction company for repairs to his Manhattan apartment forced Axelson to remove himself as the Carter administration's nominee for Deputy Treasury Secretary.
Axelson manuevered New York City through its second banckruptcy last year as a $1-a-year man on loan from Penney to the beleagured city government.
Siebert told shareholders that Axelson had been cleared of any wrong doing by both a private audit committee comprised of three of the firm's outside director as well as by federal investigators.