Earns Penney
Mary Altaffer  /  AP
J.C. Penney Co.'s second-quarter results roughly broke even from a year ago, beating Wall Street expectations as the department store retailer reaps benefited from cost-cutting moves.
updated 8/14/2009 9:08:16 AM ET 2009-08-14T13:08:16

J.C. Penney Co. roughly broke even in the second quarter, just topping Wall Street expectations as the department store chain benefits from cost-cutting moves.

The retailer also boosted its annual profit outlook, but expects sluggish sales for the rest of the year after second-quarter revenue fell 7.9 percent.

Plano, Texas-based J.C. Penney said it lost $1 million, or break-even per share, in the quarter ended Aug. 1. That compares with a profit of $117 million, or 52 cents per share, in the year-ago period. Revenue was $3.94 billion, down almost 8 percent from $4.28 billion in the year-ago period.

Analysts expected a loss of 1 cent per share on $3.94 billion in revenue.

Same-store sales, or sales at stores opened at least a year, fell 9.5 percent for the period. Same-store sales are considered a key indicator of a retailer's health.

Myron E. Ullman, III, Penney's chairman and CEO, called the consumer climate "very difficult" but said in a statement that the company's strong financial position has let it invest in several initiatives, including opening its first Manhattan store last month, he said.

Penney and other department store chains have faced increasing challenges as shoppers worry about job security, declining home prices and tight credit. While the stock market has rallied and there are signs of stabilization in the economy, business remains weak.

Also like other retailers, Penney has been cutting inventory in response. It also has been trying to expand its assortment of trendy, affordable labels.

For the third quarter, Penney expects same-store sales to decline anywhere between 5 to 7 percent and total sales to drop between 3 percent and 5 percent. For the full year, Penney said that same-store sales should fall anywhere from 7 percent to 7.5 percent. Total sales should decline in the range of 5.5 percent to 6 percent.

Based on better-than-expected results for the second quarter, the company raised its annual profit outlook. It now expects earnings per share to be in the range of 75 cents to 90 cents. That's up from its previous range of 50 cents to 65 cents per share. Analysts surveyed by Thomson Reuters estimated 89 cents per share.

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