By  on November 16, 2005

NEW YORK — J.C. Penney is joining the crowd of holiday cheer.

A day after Wal-Mart Stores Inc. expressed optimism about the holiday season, Penney's leaped in with a similar view about business over the next six weeks.

On a conference call with investors, Ken Hicks, Penney's president and chief merchandising officer, characterized the company's holiday outlook as "cautiously optimistic."

He said Penney's holiday strategy is focused on offering "unique gifts at smart prices," featuring "cross-divisional" gift themes. "You will see affordable luxury gifts such as boxed jewelry sets and women's accessories, lambskin and leather jackets in men's and women's outerwear, and spa accessories in home."

Hicks predicted that gift cards will continue to be a major category this year, and that Penney's expects "gift card sales to increase at a double-digit pace this year, similar to what we experienced last year."

The executive offered the holiday outlook as Penney's reported strong results for the third quarter ended Oct. 29, although it was up against weak year-over-year comparisons.

In the three-month period, net income swelled 57 percent to $234 million, or 94 cents a diluted share, from $149 million, or 50 cents, in the same year-ago quarter. Wall Street analysts' consensus estimate had the retailer pegged to earn 92 cents. Income from continuing operations rose 58.1 percent to $234 million from $148 million.

Sales rose 2 percent to $4.48 billion from $4.39 billion, while same-store sales gained 2.5 percent on top of a 2.6 percent comps increase in the year-ago quarter.

For the nine months, net income skyrocketed 181 percent to $537 million, or $2.05 a diluted share, from $191 million, or 64 cents, last year. Sales rose 3.6 percent to $12.58 billion from $12.14 billion, while retail store comps gained 3 percent, and the direct business saw a 3.5 percent increase.

Myron "Mike" Ullman 3rd, chairman and chief executive officer, described the third quarter as a "challenging retail environment." In a statement, he said the company is entering the fourth quarter well-positioned for the holiday selling season and customers are "reacting positively" to changes the retailer is making to its merchandise and sales environment.

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