Shares of J.C. Penney surged nearly 7 percent after the retailer had a narrower-than-expected quarterly profit drop and predicted higher comparable sales this year.
The Plano, Texas, department-store chain’s business has been hit as middle-income shoppers face tightened credit and lingering worries about unemployment. Fourth-quarter earnings fell 5.2 percent as sales slipped 3.6 percent to $5.55 billion.
Penney’s stock rose $1.70 to $27.66 a share.
Like Wal-Mart, which reported its first-ever quarterly sales drop this week, Penney appears to be missing out on selective “trading up” by some shoppers as the economy stabilizes, said JPMorgan analyst Charles Grom.
While Penney has suffered comparable-sales drops for the past two years, higher-priced chains like Macy’s, Nordstrom and Saks have recently seen better sales.
“2010 is going to be all about who is growing the top line,” Grom said, referring to retailers’ revenue.
On that front, Penney’s forecast for a low-single-digit gain in same-store sales this year caught some investors by surprise. Still, the chain may have to step up discounts to get the job done.
“The bears say they’re being too optimistic [on sales], and the bulls say, ‘I told you so,’ ” Grom told The Post. “The bears outnumber the bulls 10 to 1.”
Penney CEO Mike Ullman hopes for a sales recovery on merchandise: This fall, Penney will begin selling Liz Claiborne exclusively, and will also introduce Mango, a trendy Spanish label.
Penney’s fourth-quarter profit was $200 million, or 84 cents a share, down from $211 million, or 95 cents a share.