Friday after aggressively marking down prices on fashions to persuade its middle-income shoppers to keep spending in an increasingly uncertain economy.
The company also issued a third-quarter profit forecast that fell well below Wall Street estimates and said back-to-school shopping was starting later this year. It declined to offer a full-year outlook because of stock market turmoil fueled by fear about the economy and the downgrade of the federal debt.
“Consumer climate is clearly uncertain and the tumultuous last 10 days or so hasn’t given our core customer, the middle-income family, any reason to be more confident,” Myron E. Ullman III, Penney’s chief executive, said in an address to investors during a conference call Friday.
Penney, like many stores catering to middle-to-lower-income shoppers, faces increasing uncertainty heading into the two most important retail seasons of the year — back-to-school and the winter holiday season.
The company reported net income of $14 million, or 7 cents a share, even with the $14 million, or 6 cents a share, it earned a year earlier.
Revenue fell to $3.91 billion, from $3.94 billion, largely reflecting the company’s discontinuation of its catalog business. Revenue at stores open at least a year, a crucial measure of a retailer’s health, rose 1.5 percent for the quarter.
The profit fell short of the 10 cents a share expected by analysts, and stock in Penney, which is based in Plano, Tex., fell 28 cents, to $26.55 a share.
Penney said that gross margins declined to 38.3 percent in the quarter, compared with 39.4 percent in the year-earlier period, as it was forced to promote more aggressively early in the quarter. However, Mr. Ullman said the company had made strides in cutting expenses and improving sales productivity in the stores.
During the conference call with investors on Friday, Penney executives said that while exclusive fashion brands had sold well, basics had been weak.
“I think the customers in this economic environment have just decided to slow down the routine purchasing, and they are focused on fashion and prices points” that fit into their budget, Mr. Ullman said.
Penney said it expected earnings per share to be in the range of 15 to 20 cents for the third quarter. Analysts had expected 27 cents a share.
The company also issued a third-quarter profit forecast that fell well below Wall Street estimates and said back-to-school shopping was starting later this year. It declined to offer a full-year outlook because of stock market turmoil fueled by fear about the economy and the downgrade of the federal debt.
“Consumer climate is clearly uncertain and the tumultuous last 10 days or so hasn’t given our core customer, the middle-income family, any reason to be more confident,” Myron E. Ullman III, Penney’s chief executive, said in an address to investors during a conference call Friday.
Penney, like many stores catering to middle-to-lower-income shoppers, faces increasing uncertainty heading into the two most important retail seasons of the year — back-to-school and the winter holiday season.
The company reported net income of $14 million, or 7 cents a share, even with the $14 million, or 6 cents a share, it earned a year earlier.
Revenue fell to $3.91 billion, from $3.94 billion, largely reflecting the company’s discontinuation of its catalog business. Revenue at stores open at least a year, a crucial measure of a retailer’s health, rose 1.5 percent for the quarter.
The profit fell short of the 10 cents a share expected by analysts, and stock in Penney, which is based in Plano, Tex., fell 28 cents, to $26.55 a share.
Penney said that gross margins declined to 38.3 percent in the quarter, compared with 39.4 percent in the year-earlier period, as it was forced to promote more aggressively early in the quarter. However, Mr. Ullman said the company had made strides in cutting expenses and improving sales productivity in the stores.
During the conference call with investors on Friday, Penney executives said that while exclusive fashion brands had sold well, basics had been weak.
“I think the customers in this economic environment have just decided to slow down the routine purchasing, and they are focused on fashion and prices points” that fit into their budget, Mr. Ullman said.
Penney said it expected earnings per share to be in the range of 15 to 20 cents for the third quarter. Analysts had expected 27 cents a share.
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