Just a day after Macy's sounded a sour note about its holiday sales expectations, J.C. Penney says its sales took an unexpected drubbing in September and October. While the company had previously predicted sales would rise slightly, third-quarter operating income tumbled 18.5%, to $411 million, compared with $504 million in the same period last year. Overall, total company sales decreased 1.1%, including a 3.5% dip in comparable store sales, and a 3.6% decline in its direct sales unit. (Internet sales were up more than 11%, however.) Net income also fell, down to $261 million, compared with $286 million in the year-ago period.
"After the completion of a strong back-to-school season and a favorable response to our early fall merchandise, we were disappointed to see sales weaken dramatically," a company exec says in its release. "The combination of weak housing conditions, mortgage and credit market concerns, and rising fuel prices has clearly led to a challenging macroeconomic environment for consumers," it says. "We will be taking a cautious approach to planning our business for the fourth quarter and 2008," lowering its earnings outlook for next year.