JCPenney 3Q suffers on consumer woes

PLANO, Texas JCPenney today blamed the usual suspects--unseasonable weather, a weak housing market and rising fuel prices for its disappointing third quarter.

The company reported net income and income from continuing operations of $261 million, or $1.17 per share, for the third quarter ended Nov. 3. In last year's third quarter, income from continuing operations was $286 million, or $1.26 per share.

"After the completion of a strong back-to-school season and a favorable response to our early fall merchandise, we were disappointed to see sales weaken dramatically in September and October," said Myron Ullman, III, chairman and ceo of JCPenney. "The combination of weak housing conditions, mortgage and credit market concerns, and rising fuel prices has clearly led to a challenging macroeconomic environment for consumers. Along with unseasonable weather, this has created difficult conditions for most retailers, and our third quarter performance shows that JCPenney was not immune to those conditions.

The company reported that total sales decreased 1.1% and comparable-store sales declined 3.5%. This is below the company's guidance for comparable-store sales to increase in the low-single digits.

For the fourth quarter, JCPenney said it expects sales to be flat to up slightly. Comparable-store sales are expected to decrease in the low-single digits. The company has also lowered its earnings guidance for the fourth quarter. The company now expects fourth quarter earnings to be in a range of $1.65 to $1.80 per share. This compares with previous guidance of $2.41 per share.

For the full year 2007, the company  now expects 2007 to be in the range of $4.63 to $4.78 per share. This compares to the company's previous guidance of $5.50 per share.