Forecast Dulls Shiny J.C. Penney

Department store giant J. C. Penney(JCP Quote - Cramer on JCP - Stock Picks) posted fourth-quarter earnings that beat Wall Street's targets, though its first-quarter forecast came in shy of estimates.

Shares, which have enjoyed a big run over the past year, recently were down 4%.

For the quarter ended Feb. 3, the Plano, Texas-based retailer reported net income of $477 million, or $2.09 a share, down from $551 million, or $2.34 a share, a year earlier. The year-earlier results were boosted by a gain from discontinued operations and a lower tax expense.

Earnings from continuing operations climbed to $457 million, or $2 a share, from $450 million, or $1.92 a share, last year. The earnings on this basis beat Thomson Financial's average analyst forecast of $1.97.

Revenue increased 7% to $6.7 billion, topping Wall Street's projection of $6.6 billion.

Fourth-quarter department store sales increased 4.1%. Comparable department store sales, measuring sales at stores open at least a year, climbed 2.2%.

The company said the strongest-selling merchandise included children's apparel, fine jewelry and family shoes, and the best regional performances were in the Western and Northeastern areas of the country.

"Over the course of 2006, we saw continued growth in both sales and operating profit," said Chairman and CEO Myron Ullman. "This reflects the ongoing improvements we made in our merchandise assortments, as well as further refinements to our highly effective planning and allocation systems to ensure we have the right products for our customers whenever they want them."

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