By Phil Wahba
NEW YORK (Reuters) - Department store operator J.C. Penney Co Inc
Penney, which has lagged rivals like Macy's
As has been the case for most U.S. department stores in the past year, Penney kept inventories tight to avoid having to slash prices to clear merchandise, boosting profits even as sales lagged.
Gross margins at Penney rose 3.6 percentage points during the quarter.
Still, the company has underperformed several of its main competitors. Its same-store sales -- sales at stores open at least a year -- fell 3.8 percent in December and 4.6 percent in January, even as rivals such as Kohl's Corp
Penney's net profit the fourth quarter ended January 30 fell 5.2 percent to $200 million, or 84 cents a share, from $211 million, or 94 cents a share, a year earlier.
Excluding discontinued operations but including a non-cash qualified pension plan expense, it earned 84 cents per share. Analysts on average were expecting 82 cents per share on revenue of $5.54 billion, according to Thomson Reuters I/B/E/S.
Sales during the quarter fell 3.6 percent to $5.55 billion, while same-store sales fell 4.5 percent.
Penney has been hampered by a higher exposure to malls, where traffic has suffered particularly during the downturn. The company has also been slower to improve profit margins, though analysts say that gives it more upside for improvement in 2010.
For fiscal 2010, Penney forecast earnings of $1.55 per share, while analysts expect $1.45. In the first quarter, it expects 16 cents to 20 cents per share, while analysts expect 18 cents.
Department store operators have sought to boost their line-up of exclusive merchandise to help sales. In December, Penney signed a deal to be the exclusive U.S.-based department store retailer for Spanish fast-fashion chain Mango. In October, Liz Claiborne
Penney shares rose 5.8 percent to $27.46 in premarket trading.
(Reporting by Phil Wahba; editing by John Wallace)
