"The third quarter was difficult period for our industry," said Bob Cavanaugh, EVP and CFO, during a Thursday conference call. "We're not pleased with our results, but we're outperforming some direct competitors in key areas. In a cyclical industry affected by economic conditions, our focus is on the moderate consumer, who is having to make serious choices on discretionary spending." He says consumers are "appointment shopping," only buying during key times, such as back-to-school, a period in which J.C. Penney's comp sales rose 2.4%.
Cavanaugh said the company is taking a more cautious view on the near future of the retail market. It now expects 2007 full-year earnings to be in the range of $4.63 to $4.78 per share, compared with the previous guidance of $5.50 per share. The firm also expects comp sales to continue to decrease slightly.
During Q3 2007, the company opened 28 new and relocated stores, completing a plan to open 50 stores this fiscal year. The firm also remodeled 65 existing stores, and reported improved productivity from these sites. J.C. Penney plans to open 11 new stores in Q1 2008, and will continue its expansion plans, Cavanaugh said. "We're very committed to 250 new stores as a long-range plan. We believe that's the highest and best use of capital," he said. The company operates 1,067 department stores throughout the US and Puerto Rico.
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