J.C. Penney Misses Profit Targets

J.C. Penney JCP shares were trading lower Thursday morning after the department store retailer missed profit expectations for the first quarter, even as it offered a strong outlook.

The Plano, Texas-based retailer posted earnings of $120 million, or 54 cents a share, down from $238 million, or $1.04 a share, in the year-ago quarter. Total sales slid about 5% to $4.13 billion from a year ago.

On average, analysts expected J.C. Penney to register a first-quarter profit of 50 cents a share on sales totaling $4.17 billion, according to Thomson Reuters data. Shares were off 25 cents, or 0.6%, to $44.

"Our financial performance in the first quarter was clearly impacted by the weakened consumer environment," said CEO Mike Ullman. "Looking ahead, we will continue to take the necessary actions to align our business plans with the expectation that conditions will remain difficult for the remainder of 2008."

Ullman added that inventory will be managed through appropriate pricing actions on existing merchandise and by reducing the company's future merchandise commitments to better balance its inventory position with expected sales levels.

Still, the company's second-quarter outlook is better than expected. While J.C. Penney expects total sales to decrease in the low-single digits, it expects to earn a profit of 38 cents a share in the quarter. That's a penny higher than the average estimate compiled by Thomson Reuters, as analysts expect the economic slowdown will continue to impact J.C. Penney's earnings.

J.C. Penney's report comes during a busy week for retailers. Earlier this week, the world's largest retailer, Wal-Mart WMT, beat expectations while department store giant Macy's M posted in-line earnings.

After the closing bell, both Kohl's KSS and Nordstrom JWN are expected to post quarterly results. On Friday, Abercrombie & Fitch ANF is scheduled to release its first-quarter report.