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J.C. Penney Profit Up 1.7%; Retailer Lowers Third-Quarter Forecast

J.C. Penney said on Thursday quarterly profit inched up 1.7%, helped by back-to-school sales and the introduction of new private-label brands.

JC Penney
JC Penney

The department store owner said net profit for the second quarter, ended Aug. 4, was $182 million, or 81 cents per share, compared with $179 million, or 76 cents per share, a year earlier.

Earnings from continuing operations were 78 cents per share.

Plano, Texas-based Penney has been working to boost sales by offering more fashionable merchandise and adding new private brands, such as Ambrielle intimate apparel and Liz & Co. by Liz Claiborne.

Second-quarter sales rose 3.6% to $4.39 billion, below analysts' average estimate of $4.45 billion.

Internet sales climbed 17.4%, while direct sales, which include its catalog, fell 2.3%.

Comparable-store sales, or sales at stores open at least a year, increased 1.9%.

The company's gross margin improved by 80 basis points to 38.1% of sales, helped by better merchandise flow and the inclusion of the first week of August, an important back-to-school week, in the second quarter. The year-earlier second quarter did not include the first week of August.

Penney forecast earnings of $1.28 per share for the third quarter and $2.41 per share for the fourth quarter.

For the full year, it expects earnings from continuing operations of $5.50 per share.

Penney said it expects third-quarter comparable-store sales to rise in the low-single digits, and total department store sales to be up in the low- to mid-single digits.

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