* Ups Q1 outlook to possible profit from prior loss view
* Sticks to capex, growth plans for 2009
* Shares close up 3.3 percent (Recasts with first quarter outlook, CEO comment, byline)
NEW YORK, April 22 (Reuters) - J.C. Penney Co Inc (JCP.N) raised its first-quarter outlook for the second time in less than two weeks on Wednesday, calling for a possible profit and sending its shares up 3.3 percent.
While the U.S. department store chain still expects 2009 to be rough, it feels that it now has a grip on consumers' mind-set, allowing it to better navigate the economic downturn, executives said at its annual analyst meeting.
"I would not say we are more optimistic, but we are comforted that it is more predictable," said Chief Executive Myron "Mike" Ullman.
The mid-priced chain, which has been trimming inventories and offering less discounts to drive profitability, said it would emphasize affordable prices and trendy items to entice cash-strapped shoppers.
"We are preparing ourselves for a different consumer mind-set," Ullman said, pointing to what he called a permanent shift in shopping habits that has consumers cutting back on items that are not essential.
Penney is one of several retailers that have faced steep declines in sales as shoppers back off from spending on anything that is not essential in the recession. Such consumer thrift has resulted in the department store sector's shares taking a hit in recent months.
J.C. Penney is focused on stocking exclusive and private brands to lure shoppers to spend in its stores. To that end, it sells brands like Allen B., Bisou Bisou, nicole by Nicole Miller and Fabulosity by Kimora Lee Simmons.
Penney is also putting hard-to-find sizes of major brands in stores to ensure that it does not lose out on customers.
SURPRISING WALL STREET
For the first quarter ending May 2, Penney now expects flat to slightly positive earnings per share including a pension expense.
On April 9, it forecast a first-quarter loss of 5 cents to 10 cents a share, an improvement from an outlook for a loss of 20 cents to 30 cents a share it issued back in February.
Analysts, on average, expect a loss of 6 cents a share.
Also on April 9, J.C. Penney posted a smaller-than-expected 7.2 percent drop in March sales at stores open at least one year.
Penney said its home goods unit was the strongest in March, while jewelry sales remained weak.
"Fine jewelry is ... in a perfect storm of customer attitudes," Ullman said.
Penney's inventories are in line with sales expectations, so it does not need to discount items as deeply as before, he added.
Penney still expects to open 17 new stores in 2009 and spend about $600 million on capital expenditures. It also still sees same-store sales falling about 10 percent this year.
Ullman said he expects more consolidation in the retail sector after chains such as Mervyn's and Linens 'n Things went out of business. He waved off the idea of Penney's expanding internationally on its own.
Penney moved its annual analyst meeting from Plano, Texas, where it is based, to New York this year, citing the recession's impact on many firms' travel budgets.
Penney shares rose 86 cents to close at $26.92 on the New York Stock Exchange. They hit $28.40 during the regular trading session.
(Reporting by Aarthi Sivaraman; Editing Bernard Orr)