J.C. Penney Co. managed to offset tepid consumer spending by keeping a tight rein on operating expenses in the fourth quarter, though profits fell and the unsteady economy is making for a “conservative” 2008.

Fourth-quarter profits fell 9.9 percent to $430 million, or $1.93 a diluted share, a better showing than expected by Wall Street analysts, who had penciled $1.77 in for the quarter. Sales dropped 4.1 percent to $6.39 billion.

“With no clear indication that the consumer environment will improve during 2008, we have taken a conservative approach to planning our business,” said Myron E.  Ullman 3rd, chairman and chief executive officer. “We will remain focused on improving the customer experience in our stores and providing exciting, stylish merchandise at smart prices that will resonate well with our customers during this period.”

As part of that drive to improve the shopping experience and drive profits, Penney’s just began rolling out American Living, an exclusive brand from Polo Ralph Lauren Corp.’s Global Brand Concepts, in 600 stores.

Results this year, however, might well be ruled by a troubled economy. Some economists estimate that the economy has already slid into what, with luck, will be a mild recession.

Penney’s comparable-stores sales are expected to fall for both the first quarter and all of 2008. First-quarter profits are pegged between 75 and 80 cents a share, while those for the year are expected to land at $3.75 to $4.

For complete coverage, see Friday’s WWD.


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