Penney profit falls 10% on weaker sales

J.C. Penney Co. said Thursday that its fiscal fourth-quarter profit fell 10% as its middle-class customers struggled with a weakening economy, and the department store retailer predicted modest earnings this year.

Chief Executive Myron E. Ullman III said there were no signs that consumer spending would rebound quickly, so the company was planning “for a difficult economic climate.”

For example, the company now expects to open 36 stores this year, down from the original plan of 50 openings.

Penney said net income slipped to $430 million, or $1.93 a share, in the quarter ended Feb. 2. The company beat its own lowered expectations, and analysts had set their target at $1.77 a share.

A year earlier, the Plano, Texas-based company earned $477 million, or $2.09, when the fourth quarter included an extra week.

Sales fell 4% to $6.39 billion, matching the forecast of analysts surveyed by Thomson Financial.

Same-store sales at locations open at least a year, a key indicator in retailing, fell 2.3%.

Analysts said the company beat their fourth-quarter profit predictions by tightly controlling costs to cope with slowing sales.

Penney shares rose 8 cents to $48.03 on Thursday.

For the current quarter, the company predicted earnings of 75 cents to 80 cents a share. Analysts were expecting 80 cents.

For all of fiscal 2008, Penney said it would earn $3.75 to $4 a share, below analysts’ consensus forecast of $4.02. The company said sales would grow by a low-single-digit percentage.