By  on August 17, 2005

NEW YORK — Despite robust earnings from J.C. Penney Co. Inc. and stellar results from Nordstrom Inc., Wall Street pummeled retail stocks Tuesday as the impact of higher fuel prices weighed heavily on investors. Wal-Mart Stores Inc.'s 5.8 percent profit gain for the second quarter — the slowest earnings growth at the retailer in four years — also sent investors fleeing from the sector.

As a result, the S&P Retail Index dropped 2.6 percent to 459.07. The broader S&P 500 finished the day down 1.2 percent to 1,219.34.

The worry on Wall Street is that consumer spending on apparel, shoes, electronics and cars will slow as shoppers are forced to dole out more money on gasoline and home heating oil. But for the second quarter at least, it seemed consumers didn't mind spending their hard-earned dollars at all.

J.C. Penney a Winner
J.C. Penney's rip-roaring 79.4 percent jump in second-quarter income from continuing operations and its ninth consecutive quarter of same-store sales gains proved that the moderate consumer is willing to spend.

For the three months ended July 30, net income came in at $131 million, or 50 cents a diluted share, which compares with net income of $1 million, or a 2-cent loss, in the same year-ago quarter. Reflecting the sale of the retailer's interest in Lojas Renner SA on July 5, income from continuing operations climbed to $122 million, or 46 cents a diluted share, from $68 million, or 22 cents, a year ago. The Wall Street consensus estimate called for earnings per share between 35 cents and 40 cents.

Sales in the quarter rose 5.4 percent to $3.98 billion from $3.78 billion. Same-store sales came in with a gain of 4.2 percent, which is on top of a 6.9 percent comp increase in the year-ago quarter.

For the six months, net income rose to $303 million, or $1.13 a diluted share, from $42 million, or 14 cents, in the year-ago period. Income from continuing operations rose 58.4 percent to $293 million, or $1.09, from $185 million, or 60 cents, last year. Sales in the period rose 4.5 percent to $8.1 billion from $7.75 billion.

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