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• May 15, 2008 10:05 am US/Central
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  JC Penney 1Q Profit Falls 50%

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JC Penney 1Q Profit Falls 50%

J.C. Penney reported first-quarter profits had been halved and on Thursday predicted "difficult" conditions for the entire year as consumers pull back on spending.

Net income fell to $120 million, or 54 cents per share, from $238 million, or $1.04 per share, a year ago, the Plano, Texas-based retailer said.

Total sales fell 5 percent to $4.13 billion from $4.35 billion.

Profits per share were better than the 50 cents expected from Analysts surveyed by Thomson Financial, and the retailer's shares rose 43 cents to $44.68 in early trading.

Analysts expected slightly higher revenue of $4.17 billion.

"Our financial performance in the first quarter was clearly impacted by the weakened consumer environment," said Myron E. Ullman III, chairman and chief executive.

In April, the retailer released details from its strategy to ride out a tough period for the entire sector.

J.C. Penney said it would reduce store openings and renovation plans, while trying to cut expenses.

"We will continue to take the necessary actions to align our business plans with the expectation that conditions will remain difficult for the remainder of 2008," Ullman said. "Accordingly, inventory will be managed through appropriate pricing actions on existing merchandise and by reducing our future merchandise commitments to better balance our inventory position with expected sales levels."

During the first quarter, total sales decreased 5.1 percent. Comparable store sales, a key indicator of a retailer's health, decreased 7.4 percent, but was at the top end of the company's revised guidance for a high-single digit decrease.

The best performing stores were in the northeast and central regions. Internet sales increased 8.7 percent on top of an 18 percent increase in last year's first quarter.

The company predicted a low single-digit decrease in total sales for the second quarter, with earnings per share of about 38 cents.

Analysts were looking for earnings of about 37 cents per share in the second quarter.

(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)