Department store retailer JC Penney Company Inc on Friday (15 May) raised its full-year sales and earnings guidance despite posting a 79% slump in first quarter profit as shoppers spent less in its stores.

The Plano, Texas-based company said net income tumbled to $25m or $0.11 per share, from $120m or $0.54 per share last year, with earnings hit by $114m in pretax pension costs.

However, a 5.9% drop in sales was "better than expected," the company said, while same-store sales fell 7.5% percent. Women's apparel was the best-selling merchandise.

Better control of inventory and expenses, led to a 50 basis points improvement in gross margins to 40.5% of sales.
"Looking to the balance of the year, we expect consumer spending and mall traffic to remain weak, which will be particularly evident against tough comparisons in the second quarter," Myron E (Mike) Ullman III, chairman and CEO said.

"As these conditions persist, we will continue to deliver newness and excitement in our merchandise assortments while maintaining a vigilant focus on the areas of the business we control."

JCPenney, which operates 1,101 department stores, said it expects second quarter comparable store sales to fall between 9% and 12%, with a loss per share in the range of $0.15 to $0.25.

For the full year, same-store sales are seen down by around 9% and earnings in a range of $0.50 to $0.65 per share.