Byline: Thomas J. Ryan

NEW YORK — While many chains banged out robust September sales, a few, including J.C. Penney Co. and ShopKo, warned that disappointing sales so far were depressing third-quarter results.
Despite there still being one month left in the quarter, Penney and Shopko, as well as One Price Clothing, blamed their shortfalls largely on a promotional selling climate. Claire’s cited problems absorbing last year’s acquisition of Afterthoughts.
Penney said “the challenging retail environment” and weakness at its Eckerd drugstore chain would cause earnings to range from a “small profit to a loss” for the third quarter. Standard & Poor’s lowered its credit and unsecured debt ratings for Penney’s with a “negative” outlook.
Analysts’ consensus estimate was 10 cents. Shares of Penney fell $1.13 to close at $10.06.
Shopko expects third-quarter earnings of between 2 and 7 cents a share before one-time charges, compared with 37 cents a share a year ago. Analysts were looking for 25 cents.
William J. Podany, ShopKo chairman, president and chief executive officer, said the revision “is due largely to an economic backdrop that translates into less discretionary income for our customers. Consumer debt levels and rising energy costs are just a few of the factors taking their toll on the consumer’s capacity to spend in the retail arena.”
Given the weakness, the discounter, based in Green Bay, Wis., plans to reduce costs by $15 million to $20 million, cut planned capital expenditures by $80 million to $100 million and trim inventories.
It said fourth-quarter earnings would range between $1.44 to $1.64 before special charges, versus the 94 cents the Street expected and $1.74 a year ago. Shares of ShopKo fell more than 24 percent, closing at $8, down $2.56.
One Price Clothing forecast a loss of between 59 and 69 cents a share, below the Street’s 27-cent loss target, due to heavy markdowns on spring merchandise.
Larry I. Kelley, president and ceo, said: “We have experienced softness in many product categories, particularly in our separates area. In addition, a more promotional retail environment compared to last year has negatively impacted sales.” Shares of One Price fell 44 cents, or 24 percent, to $1.38.
Claire’s expects its earnings to range between 25 and 27 cents a share — short of Wall Street’s consensus of 32 cents — due to negative comps at Afterthoughts as the rollout of a new point-of-sale system impeded inventory flow.
“We are correcting the problem and we feel Afterthoughts will be well positioned for the holiday selling season,” said Rowland Schaefer, chairman and chief executive. Shares of Claires rose 13 cents to $18.25.
Although they did not issue warnings, shares of some other chains fell because of weaker-than-expected sales, including Ann Taylor (down $3.25 to $36), Bebe (down $1.19 to $13.63) and Ames (down 94 cents to $4.88, a 16 percent drop).
But overall, Wall Street rewarded stores for a surprisingly strong month, particularly those boasting improving trends like Abercrombie & Fitch, which rose $3.19 to $23.13; Nordstrom, up $1.19 to $16.38; Pacific Sunwear, up $3.19 to $22.06; and Bradlees, up 84 cents to $2, a 73 percent leap. Even Gap bounced back — up $1.31 to $21.19 — as investors had been preparing for worse than its 8 percent same-store decline.
Others getting a pop on good sales included Talbots, up $7.06 to $73; Federated Department Stores, up 88 cents to $27.56; Kohl’s, up $1.25 to $57.94; Sears Roebuck, up 47 cents to $33.67; Neiman Marcus Group, up $1.50 to $34.13; TJX, up $1.38 to $25.69; American Eagle Outfitters, up 88 cents to $34.50, and Chico’s FAS, up $3.19 to $38.94.

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