JC Penney Profit Falls 9%; Retailer Lowers Forecast
J.C. Penney reported a 9 percent drop in quarterly profit Thursday, saying sales weakened "dramatically" in September and October, and the department store operator slashed its fourth-quarter forecast.
Shares fell 2.8 percent to $45.40 in premarket trading before the New York Stock Exchange open.
The mid-tier department store operator said net income fell to $261 million, or $1.17 per share, for the third quarter ended Nov. 3 from $287 million, or $1.26 per share, a year earlier.
Excluding a benefit of 14 cents per share, earnings were $1.03, while analysts, on average, were expecting the company to earn $1.01 per share, according to Reuters Estimates.
The U.S. housing market slowdown, high energy prices and uncertain credit market has taken a toll on Penney's predominately middle-income shoppers.
After shoppers loaded up on back-to-school items in August, they took a pause for the rest of the quarter, delaying purchases in the face of a shaky economic environment and unseasonably warm weather.
Penney's total quarterly sales fell 1.1 percent to $4.73 billion while sales at department stores open at least a year, a key retail gauge known as same-store sales, fell 3.5 percent.
In October, Penney cut its third-quarter profit forecast to a range of $1 to $1.04 per share, from $1.28, and earlier this month said it was approaching the fourth quarter cautiously as the challenging retail environment was expected to continue "for the foreseeable future."
Penney said it now expects fourth-quarter earnings to be in a range of $1.65 to $1.80 per share, down from its previous view of $2.41 per share.
For the fourth-quarter, it expects same-store sales at its department stores to be flat to up slightly.
It now expects to earn $4.63 to $4.78 per share for the full year, down from its previous forecast of $5.50 per share.