JC Penney Issues Profit Warning

J.C. Penney [[jcp]], the third-largest US department-store chain, slashed its quarterly sales and profit forecasts on slower consumer spending as a result of higher energy costs and a housing market slump. It said today first-quarter sales at stores open at least a year will post a “high single-digit” percentage-point decline. In early New York trading, J.C. Penney fell as much as 14% - the most in three weeks. It said quarterly profit will be about 50 cents a share, down from an earlier projection 75 cents to 80 cents. Other analysts had estimated an average profit of 76 cents in the first quarter, so today’s announcement was worse than expected. J.C. Penney CEO Myron Ullman said, “While the economic stimulus package may provide some temporary benefit, we expect the continuation of a difficult environment over the course of 2008.”

Maybe they should start looking into selling hip gadgets which appeal to today’s generation. And speaking of gadgets, Apple [[aapl]] is having its fifth advance in six days after an analyst from Bank of America [[bac]] said Apple may start selling third-generation iPhones in the second quarter, increasing earnings.

Bear Stearns [[bsc]] fell at least 4% today. Chairman James “Jimmy” Cayne, perhaps frustrated at his huge loss of fortune from the Bear Stearns takeover deal, sold his entire stake of 5.6 million shares in the investment bank for $10.84 each on March 25, according to a regulatory filing.

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Comment by Jonathan Salem Baskin

2008-03-29 09:34:29

Humm…could Ullman’s decision early last year to run brand marketing that purposely and explicitly gave consumers no reason to shop at Penney stores have anything to do with its poor performance. Sure, weather and the economy (and the orientation of the planets) can be blamed for business performance, but isn’t the purpose of branding and marketing to somehow (or at least somewhat) overcome those influences on sales? Penney made a big stink about an approach to its branding called “lovemarks,” which was intended to create these ethereal, emotional links to its products while not actually giving anybody any information that would motivate sales.

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