JC Penney 1Q Profit Slides on Pension Expense

Friday, May 15, 2009  |  Updated 8:15 AM CDT
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JC Penney 1Q Profit Slides on Pension Expense

Associated Press

JC Penney's stock fell $1.25, or 4.7 percent, to $25.40.

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J.C. Penney Co. said Friday that its first-quarter profit tumbled 79 percent on a hefty pension expense. While the quarterly results managed to beat analysts' estimates, the department store chain said it will miss Wall Street's full-year forecast.

The retailer's stock fell $1.25, or 4.7 percent, to $25.40 in electronic premarket trading.

J.C. Penney earned $25 million, or 11 cents per share, for the quarter ended May 2. That compares with $120 million, or 54 cents per share, a year ago. Analysts polled by Thomson Reuters, who generally exclude one-time items, expected profit of 10 cents per share.

Plano, Texas-based J.C. Penney said its quarterly results were hurt by a pension expense of $114 million, or 32 cents per share.

Sales dropped 6 percent to $3.88 billion from $4.13 billion. Sales at stores open at least a year, known as same-store sales, fell 7.5 percent partly on weakness in its fine jewelry business.

Chairman and Chief Executive Myron E. Ullman III cautioned that the company still expects soft consumer spending and mall traffic for the rest of the year.

Department stores like J.C. Penney have been among the hardest hit retailers in the recession as shoppers have focused on necessities such as groceries.

Because of that, J.C. Penney predicts full-year earnings of 50 cents to 65 cents per share. Analysts had expected a profit of 76 cents per share.

The retailer anticipates a second-quarter loss of 15 cents to 25 cents per share. Sales are expected to drop 7 percent to 10 percent. Since J.C. Penney had sales of $4.28 billion in the prior-year period, that implies second-quarter sales of $3.85 billion to $3.98 billion.

It predicts same-store sales will fall 9 percent to 12 percent.

Analysts forecast a second-quarter loss of 9 cents per share on revenue of $3.94 billion.

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