(Corrects typographical error in first paragraph)
* Penney Q1 EPS $0.11 matches Street view $0.11
* Abercrombie loss 31 cts/shr vs view loss 12 cts/shr
* Penney sees Q2 loss 15 cts-25 cts; FY EPS $0.50-$0.65
* Abercrombie's Ruehl chain under review
* Penney shares off 0.6 pct; Abercrombie down 3.3 pct
(Recasts with analyst comments)
By Aarthi Sivaraman
NEW YORK, May 15 Retailers J.C. Penney Co Inc
(JCP.N) and Abercrombie & Fitch Co (ANF.N) posted results that
showed consumers were still wary about buying non-essential
The recession, mounting job losses and credit worries have
hammered consumers, who are steadfastly sticking to shopping
lists for food and other essentials, shunning items they do not
need, and seeking deep discounts where they do buy.
"There are more shoes to drop on the employment front,"
said Ken Perkins, president of research firm Retail Metrics.
"Couple that with ... the devastation in total net worth of
consumers... and (you have) a propensity for Americans to
finally realize 'Oh my God, I actually have to save.' The more
we save, the less we spend."
Department stores like Penney have been especially hard-hit
as consumers focus on buying only what they must have, while
Abercrombie had stubbornly tried to keep many prices higher
than rivals', running afoul of shoppers searching for
But hurting from the latest quarter's loss, Abercrombie
said it is working to reduce prices across all brands.
"With a challenging economic environment, the consumer
continues to show a reluctance to spend on premium brands; a
price consciousness dictating shopping habits unlike anything I
have ever seen," said its Chief Executive Mike Jeffries, a
retail industry veteran.
The teen clothing retailer, whose casual fashions -- and
higher prices -- have evoked the good life for many American
teenagers, posted a first-quarter loss wider than Wall Street's
expectations, and said it was conducting a strategic review of
its struggling Ruehl chain. [ID:nN151767]
Meanwhile, Penney posted an in-line quarterly profit, but
forecast second-quarter and full-year results below analysts'
The mid-priced chain, which has been trimming inventories
and offering fewer discounts to drive profitability, has tried
to emphasize affordable prices and trendy items to entice
But 2009 should remain rough, Penney warned.
"We expect consumer spending and mall traffic to remain
weak, which will be particularly evident against tough
comparisons in the second quarter," CEO Myron "Mike" Ullman
said in a statement on Friday.
Penney's net profit was $25 million, or 11 cents per share,
for the fiscal first quarter ended May 2, compared with a
profit of $120 million, or 54 cents per share, a year earlier.
Analysts had expected a profit of 11 cents per share on
average, according to Reuters Estimates.
Sales fell 5.9 percent to $3.88 billion, while sales at
stores open at least one year fell 7.5 percent.
Penney's troubles reflect the pressure in the department
store sector. Earlier this week, rival Macy's Inc (M.N) posted
a 9.5 percent drop in first-quarter sales and stuck to its
forecast for sales to fall for the full year. [ID:nN13326220]
For the second quarter, Penney forecast a 7 to 10 percent
fall in total sales and a loss of 15 to 25 cents per share.
Analysts have expected a loss of 9 cents per share.
So far, sales in May have not been dramatically different
from the first quarter's trends, the company said.
For the year, Penney expects a per-share profit of 50 to 65
cents and a same-store sales fall of about 9 percent.
Analysts have expected a profit of 75 cents per share.
Penney shares were down 15 cents or 0.6 percent to $26.50.
But earlier they had risen as high as $27.85.
"They are looking at their guidance and thinking its too
conservative," said Thomas Weisel analyst Liz Dunn.
Abercrombie's net loss was $26.8 million, or 31 cents per
share for the first quarter ended May 2, compared with a
year-earlier net profit of $62.1 million, or 69 cents a share.
Analysts, on average, had expected a loss of 12 cents per
share, according to Reuters Estimates.
Sales fell 24 percent to $612.1 million, while same-store
sales fell 30 percent.
Abercrombie has lost out on sales by sticking to its higher
prices in an economy that has forced even teenagers to be
mindful of how they spend.
But with its new willingness to reduce prices, "management
sent a strong statement that they are reacting to the current
pricing environment," Credit Suisse analyst Paul Lejuez wrote.
Abercrombie's strategic review of Ruehl, which posted a
drop of 34 percent in same-store sales, may result in a noncash
impairment charge of up to $55 million for the first quarter.
Its shares were down $1.25 or 4.6 percent at $26.00.
(Additional reporting by Dhanya Skariachan in Bangalore;
Editing by Dave Zimmerman and Gerald E. McCormick)