updated 2/16/2006 11:49:33 AM ET 2006-02-16T16:49:33

Shopping mall stalwart J.C. Penney Co. Inc. said Thursday that its profit jumped 65 percent in the fourth quarter helped by strong sales in stores and online. The department store retailer also offered a bullish outlook for 2006.

Penney's shares rose $1.26, or 2.2 percent, to $57.89 in early trading on the New York Stock Exchange after the news. The day's strongest level of $58.82 was the highest the stock has been in more than seven years.

Penney said it earned $551 million, or $2.34 per share, compared to $333 million, or $1.17 per share a year earlier.

Excluding gains from tax adjustments related to the sale of the Eckerd drugstore chain and another one-time tax gain, Penney would have earned $1.71 per share.

Analysts had expected Penney to earn $1.63 per share in the most recent quarter, according to a survey of analysts by Thomson Financial.

Revenue rose 4.2 percent, to $6.20 billion. Analysts expected $6.19 billion.

Same-store sales, or sales at stores opened at least a year, rose 2.6 percent in the quarter ended Jan. 28. Same-store sales are considered the best indicator of a retailer's health.

Chairman and Chief Executive Myron E. "Mike" Ullman III said the results led the board to approve a 44 percent dividend increase and an additional $750 million to repurchase shares.

Ullman added that the company realizes it may face "short-term disruptions" from industry consolidation and the high price of energy and changing credit payment terms for customers.

Plano-based Penney said same-store sales would rise by low single digits in 2006 and earnings per share would be $4.14 to $4.24 per share, including 80 cents per share in the first quarter.

Analysts had been expecting $3.55 per share for the new year, including 79 cents per share in the first quarter.

For the 12 months that ended Jan. 28, Penney said it earned $1.09 billion, or $4.26 per share, including discontinued operations. That compared to $524 million or $1.76 per share the year before. Revenue rose 3.8 percent to $18.78 billion. Penney operates about 1,000 department stores in the United States and Puerto Rico.

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