FINANCE

Smartphones shown to drive demand for mobile banking and payments

BY Katherine Boccaccio

New York — Research by ACI Worldwide and Aite Group has identified a new group of smartphone fanatics – coined Smartphonatics – are driving demand for mobile banking and other financial services.

The study, which examined mobile banking and payment adoption rates in 14 countries, identified a stark difference between mobile adoption among Smartphonatics (whose behaviors are changed from smartphone use) and other consumers: while 80% of Smartphonatics have used their smartphones for mobile banking, only one-third of non-Smartphonatics report doing so.

Similarly, 70% of Smartphonatics have used their smartphones for mobile payments, while less than a quarter of non-Smartphonatics have done so.


“Smartphonatics enthusiastically use their smartphones when they shop for products and services as well as when they interact with their banks,” said Ron Shevlin, senior analyst, Aite Group. “They exist around the world and while they may be more concentrated in some countries it is quite clear they are an emerging consumer force.”

Smartphonatics are driving the adoption of mobile banking and payments, added Shevlin, and will be an agent for change.

The survey found that Smartphonatics are more common in India and China than in the United States and Europe. But, globally, nearly 25% of consumers can be classified as Smartphonatics.



The researchers assured that mobile will not replace traditional banking or payment systems. The study also determined that the emergence of Smartphonatics will not result in the demise of traditional banking or payment systems. The findings indicate that while using a mobile device is the preferred method of payment and banking in many groups, it is not expected to be the only method. Smartphonatics are more willing than other consumers to experiment with different approaches to mobile payments and banking. Also, simply owning a smartphone does not make one a Smartphonatic.


“Consumers expect to shop and transact anywhere, at any time, making mobile the hottest area of opportunity for financial institutions, processors and retailers today,” said Ralph Dangelmaier, president, Global Markets and Services, ACI Worldwide.

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FINANCE

J.C. Penney loses $163 million in Q1; same-store sales slide 18.9%

BY Marianne Wilson

Dallas — J.C. Penney Co. on Tuesday reported a wider-than-expected loss of $163 million, or 75 cents a share, for its fiscal quarter ended April 28, 2012, compared with a year-earlier profit of $64 million.

Excluding markdowns to reduce inventory levels, restructuring costs and pension-plan expenses, the loss was $55 million or $0.25 per share, compared with a year-earlier profit of 36 cents.

Same-store sales declined 18.9% in the quarter. Total sales dropped 20.1% to $3.15 billion, which J.C. Penney said included the effects of exiting its outlet business. Internet sales through Jcp.com were $271 million in the first quarter, plunging 27.9% from last year.

The company said that while sales were slower than expected, its transformation was ahead of schedule.

“Sales and profitability have been tougher than anticipated during the first 13 weeks, but the transformation is ahead of schedule,” said Ron Johnson, CEO of J.C. Penney. “While we have work to do to educate the customer on our pricing strategy and to drive more traffic to our stores, we are confident in our vision to become America’s favorite store. We fully expect that the bold and strategic changes we are making to our operations will result in improved profitability and sustainable growth over the long term.”

J.C. Penney is in the midst of a major transformation, which includes a new everyday low pricing strategy that was launched on February 1, 2012. The strategy replaced Penney’s previous heavy reliance on promotions and discounting.

Gross margin narrowed to 37.6% from 40.5% due to lower-than-expected sales and the impact of deeper seasonal markdowns to clear inventory.

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JCPenney stands behind strategy as comps, earnings slip in Q1

BY CSA STAFF

PLANO, Texas — From personnel changes to its new "fair and square" price strategy, JCPenney has put a lot into changing the company’s image, and investors are waiting for it to pay off. For the first quarter, the company reported an adjusted net loss of $55 million or 25 cents per share, excluding markdowns taken as a result of the company’s continuing efforts to reduce inventory levels to align with its new strategy, restructuring and management transition charges and non-cash qualified pension expense. On a GAAP basis, the company reported a net loss of $163 million or 75 cents per share. A reconciliation of non-GAAP adjusted net loss to the most directly comparable GAAP financial measure is included with this release.

Comparable-store sales for the first quarter declined 18.9%. Total sales decreased 20.1%, which includes the effects of the company’s exit from its outlet business. Internet sales through jcp.com were $271 million in the first quarter, decreasing 27.9% from last year.

"Sales and profitability have been tougher than anticipated during the first 13 weeks, but the transformation is ahead of schedule. Customers love the new JCP they discover in our stores. Our shop strategy has been applauded by vendor and design partners, our merchants have stepped up to the challenge of improving our merchandise and presentation, we have dramatically simplified our business model and reorganized our teams at headquarters and in our stores. While we have work to do to educate the customer on our pricing strategy and to drive more traffic to our stores, we are confident in our vision to become America’s favorite store. We fully expect that the bold and strategic changes we are making to our operations will result in improved profitability and sustainable growth over the long term," said Ron Johnson, CEO of JCPenney.

In light of charges related to simplifying its operations and adjusting its merchandise assortment, JCPenney said it no longer expects to meet its annual GAAP earnings guidance of $1.59 per share, but affirms its non-GAAP earnings guidance of $2.16 per share which excludes non-cash qualified pension expense, restructuring charges and markdown reserves as we transition our merchandise assortment.

Additionally, the company announced today that it will discontinue the 20 cents per share quarterly dividend. On an annual basis, this will result in cash savings of approximately $175 million, which will be used to help fund the broad-based transformation plan that jcpenney announced in January.

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