Like most retailers, J.C. Penney (NYSE: JCP) is struggling. Its stock is more than 50% off its 52-week high and the company recently announced it intends to slow its expansion plans.

On Monday, the company announced the launch of Dorm Life, a "comprehensive modern lifestyle brand for today's design-savvy young adults." As the incredibly uncreative name would suggest, the collection is aimed at college students looking to furnish dorm rooms. Sample prices include "$3.99 for a bath towel, $24.99 for window panels and $29.99 for a table lamp to $39.99 for a comforter, $59.99 for an ottoman and $149.99 for over-the-bed storage."

J.C. Penney is not going to succeed or fail based on a line of student-oriented furniture -- it's far too big of a company -- but it's hard to see how this brand will work. The prices are substantially higher than similar offerings from Target (NYSE: TGT), and I think that Target probably has stronger brand equity among college students than J.C. Penney. The name seems wrong too -- the average J.C. Penney shopper is neither young nor hip (from what I've seen in the stores), but that's who it needs to attract with this line, and this whole idea seems to lack spunk -- even the website is putting me to sleep.

If this is how J.C. Penney plans to catch on with younger shoppers, I'm not impressed.

I know that what you probably wanted to hear most is that the economy's slowdown is at an end so that some of your beaten-down stocks could enjoy a nice recovery. When the stock markets started declining towards the end of last year, SmartMoney tells us that analysts began to place bets on when we might see stocks rebound. Back then, many fund managers had expected a rally in the second half of 2008.

The Federal Reserve's decision to slash interest rates several times certainly gave a temporary boost to stocks -- not enough for a long-term rally, though. Daily concerns such as the deep housing slump and the rising inflation today give the impression that a second-half comeback is but a dream; it that would be quite hard to accomplish.

While analysts on Wall Street mostly believe a long-term rally is not too realistic now, they believe a moderate boost, stemming from the Fed's rate cuts and the $117 billion in tax rebates going into banks' accounts, is likely. On the other hand, looking at corporate profits, Citigroup analysts believe that predictions related to stocks' earnings figures are too high when taking the challenging market conditions into account.

Penney (J.C.) (NYSE: JCP) is a little timid right now in the face of the recession. According to this AP piece, CEO Mike Ullman, speaking at an analysts' meeting, is reducing the number of new locations he plans to debut this year -- look for 36 instead of 50. The CEO said that he doesn't like the unpredictability that currently exists in the macroeconomic world.

He's right to be careful. Consumer confidence might head lower from here. And considering that J.C. Penney reported terrible comps for March -- the retailer saw a decline of 12.3% -- now is probably not the time to be in expansion mode. Instead, management needs to figure out how best to connect with the mall traffic. This will necessitate new marketing campaigns that aggressively promote the brand and the shopping experience, and differentiate the chain from competitors such as Sears (NASDAQ: SHLD) and Macy's (NYSE: M). Retailers, in my opinion, often underestimate the value of investing in creative campaigns that focus more on the experience a consumer receives when he or she is in the store rather than the perceived value that a consumer has regarding the inventory portfolio.

In terms of investment potential, J.C. Penney is not a retail company that I'm seriously looking at right now. I'll wait to hear more financial updates from management; it isn't expensive at the moment, and it is certainly eons away from its 52-week high, but I just don't have a good feel for its growth potential yet. Interestingly enough, I wrote about American Eagle Outfitters (NYSE: AEO) the other day, another cheap retail stock; both J.C. Penney and American Eagle Outfitters might be considered similar stories in terms of valuation, but for me, I find American Eagle to be the more attractive candidate from a brand viewpoint and in terms of bouncing back big when the economy improves (that's my current outlook, at least). We'll have to wait and see how this mall story evolves.

Disclosure: I don't own shares in any of the companies mentioned; positions can change at any time.

After showing optimism last month over its further earnings, department store operator J.C. Penney Inc. (NYSE: JCP) turned this morning to the pessimistic side and warned it expects first-quarter earnings below its previous predictions due to weak consumer demand.

The company now expects earnings of about 50 cents per share in the first-quarter, down from its prior forecast for profit in a range of 75 cents and 80 cents per share. This is well below analysts' expectations of earnings of 75 cents per share in the quarter, according to Thomson Financial.

J.C. Penney blamed challenging market conditions that put a curb on consumer spending. The slumping U.S. housing market, credit crisis and soaring oil prices put pressure on consumer confidence, resulting in low revenue numbers. During the Easter holiday, the retailer counted lower-than-expected sales.

J.C. Penney (NYSE: JCP) is recently trading at $35.34 in pre-open trading, below its close of $40.52.

JCP revised Q1 sales and earning outlook lower.

Myron Ullman, JCP Chairman and CEO, says: "Consumer confidence is at a multi-year low."

JCP April option implied volatility of 54 is above its 26-week average of 49 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Shares of department store retailer Sears Holdings Corp. (NASDAQ: SHLD) have moved higher this morning, despite the fact that the company posted a 47.5% decline in fourth-quarter profit, hurt by increased markdowns and weak sales of its products.

The retailer announced that its quarterly profit dropped to $426 million, or $3.17 a share on declining margins as sales at its Kmart and Sears stores slipped due to the weak U.S. economy and increased competition. These numbers are down from $811 million, or $5.27 per share reported in the same period a year ago.

Included in the company's earnings numbers was a one-time gain related to the sale of some assets. Excluding that, Sears earnings numbers would have come at $3.04 per share. Analyst estimates (which typically exclude one time items) was for $3.10 per share in the quarter.

The market is looking to extend yesterday's rally, and shares of department store retailer J.C. Penney Inc. (NYSE: JCP) are also moving higher. Today's price move comes in reaction to estimate beating numbers, despite posting a decline in fourth-quarter.

For the quarter, the retailer said that its profit slipped 10% to $430 million, but the decline was smaller than expected as the company's costs control offset lower sales from the weak consumer spending environment. J.C. Penney posted quarterly earnings of $1.93 per share, topping analysts' predictions for earnings of $1.77 per share. These numbers were down from $477 million, or $2.09 per share reported in the same period a year ago, but in the current market environment is being viewed as a victory by Wall Street.

The company did post a decline its fourth-quarter revenue which slipped 4% to $6.39 billion, down from $6.66 billion a year earlier. The drop in revenue came as the retailer had to face a weal consumer environment brought by the U.S. housing market slowdown, higher food and fuel prices.

TheStreet.com's Jim Cramer explains what could force the Fed to cut rates again.

The housing index just can't rally for a minute. The thing's amazing. The stress of the system is so clearly manifested by this that I have to wonder if the Fed wants this index lower.

The fact that the Fed's speakers never mention things like this index and the homebuilders makes me wonder if this group is actually what the Fed wants to put out of business. I wonder if the Fed thinks that Pulte (NYSE: PHM) (Cramer's Take) and Horton (NYSE: DHI) (Cramer's Take) and Lennar (NYSE: LEN) (Cramer's Take) and Standard Pacific (NYSE: SPF) (Cramer's Take) and Centex (NYSE: CTX) (Cramer's Take) need to go bankrupt before the Fed can ease any more.

Many of these firms lent money recklessly. Are the Fed heads thinking these companies need to pay like the New Centurys and the NovaStars (NYSE: NFI) (Cramer's Take) did? (Are the feds, by the way, thinking that this GMAC company has to go because that was a huge provider of crummy mortgages?)

Not so fast, you folks crying bear! In the latest edition of StockWatch: Between The Bells, BloggingStocks' own Georges Yared says this is still a bull market, although it's undergone significant correction. The chief investment strategist of Yared Investment Research says this is a market of much opportunity.

Macy's (NYSE: M) is expected to report Q3 EPS of 8 cents on 11/14 according to Thomson First Call. M operates 850 stores in 45 states. M overall option implied volatility of 54 is above its 26-week average of 40 according to Track Data, suggesting larger risk.

J.C. Penney (NYSE: JCP) is expected to report 3Q EPS of $1.02 cents on November 15 according to Thomson First Call. JCP closed at $46.31. Alex Brown lowered its price target on JCP to $83 from $55 on November 12. JCP overall option implied volatility of 56 is above its 26-week average of 38 according to Track Data, suggesting larger price risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

MAJOR PAPERS:

• A WSJ.com survey found that economists are more optimistic about the economy and see a lessening chance of a recession, the Wall Street Journal reported.
• Warren Buffett's Berkshire Hathaway Inc (NYSE: BRK.A) sold its shares in the China-controlled PetroChina Company Limited (NYSE: PTR), according to the Wall Street Journal's "Heard on the Street" column, leading many investors uncertain about China's stock valuations.
• The WSJ also reported that a jury in Nevada awarded $134.5M to three women who said hormone therapy drugs manufactured by Wyeth (NYSE: WYE), including Prempro and Premarin, caused their breast cancer.

OTHER PAPERS:

• The SEC began an inquiry into oversight of the New York State pension fund. The SEC is trying to find out if civil violations of federal securities laws were committed, the New York Times reported.
• Over 90,000 children's products imported by J.C. Penny Company (NYSE: JCP) from China, Taiwan and Vietnam, were recalled because of dangerous levels of lead, the Associated Press reported.

WEB SITES:

• Google Inc (NASDAQ: GOOG) said on its blog that it has improved its service for the Shanghai and Shenzhen stock exchanges by providing pricing data in real time and hopes the SEC will approve their "Last Sale" proposal, which would allow users free and unlimited access to real-time last sale prices for the NYSE and Nasdaq stocks.

Monday August 13

• Sysco Corporation (NYSE: SYY) to report Q4 earnings; conference call at 9:45am.
• PDUFA date for Indevus Pharmaceuticals Inc's (NASDAQ: IDEV) Sanctura XR, an overactive bladder drug.

Tuesday August 14

• The Home Depot Inc (NYSE: HD) to report Q2 earnings; conference call at 9am. Home Depot is expected to post substantial Q2 revenue/EPS declines, but equally important will be the company's comments: with the housing sector expected to remain sluggish through at least late 2007, analysts will evaluate whether HD can overcome that headwind with a new focus on customer service, demographic trends that suggest increased home repair/remodeling, and 20-year high homeownership rates that suggest steady house goods demand.
• District Court California: Broadcom Corporation (NASDAQ: BRCM) to request an injunction related to Qualcom Incorporated's (Nasdaq: QCOM) infringement of 3 Broadcom cellular baseband patents.

Wednesday August 15

• Macy's Inc (NYSE: M) to report Q2 earnings; conference call at 10:30am.
• PDUFA date for GPC Biotech's (NASDAQ: GPCB) Satraplatin for treatment of hormone refractory prostate cancer.

Thursday August 16

• JC Penney Co Inc (NYSE: JCP) to report Q2 earnings; conference call at 9:30am.
• Hewlett Packard Company (NYSE: HPQ) to report Q3 earnings; conference call at 5pm. Analysts will evaluate HPQ's ability to maintain momentum in its innovative imaging/printing group, which is expected to help HPQ post solid Q3 revenue gains.

Friday August 17

• Quantum Corporation (NYSE: QTM) to hold annual shareholder meeting at 12pm.
• PDUFA Date for Endo Pharmaceuticals Holdings Inc's (NASDAQ: ENDP) and Vernalis PLC's (OTC: VNLSY) Frova, for menstrually-related migraine headaches.

More retail same-store sales results came in this week, and retailer J.C. Penney Company, Inc. (NYSE: JCP) stated yesterday that same-stores sales rose 2.6% in December. The hot categories in December during the holiday shopping season were, not surprisingly, children's merchandise, fine jewelry and fashion jewelry.

Shares of JCP were mixed this morning as the retailer's results for December beat analyst expectations of 2.4%, and Penneys also beat the year-ago same-store sales growth amount of 2.2%, which it reported in January of 2006.

Penneys also said that seasonal and gift categories like home entertainment also contributed to solid gains i December. Regarding January predictions, the retailer indicated that a low-single-digit rise in same-store sales in January would occur, and that it expects direct sales to be down slightly compared with a 4.3% growth rate in the year-ago period.

Here's a development that should be mildly unsettling for J.C. Penney shareholders: In a terse press release that came across the wire at 1 PM EST today, J.C. Penney announced that it was firing its Chief Operating Officer, Catherine West. No reason was given. The stock is down 1% on the news, but if you called Jim Cramer and asked him what to do, I'm 99% sure I know what he'd say: Sell the %$@@#!! stock!

True, it's most likely nothing. But Cramer's policy on executive terminations and resignations is simple: Shoot first, ask questions later. That kind of thinking would have saved you from a lot of disasters. With a chance to get out of the stock without much of a drop (and the reportedly slow holiday season for retailers just behind us), investors may want to consider dumping J.C. Penney Company, Inc. (NYSE:JCP) like it dumped its COO.

Kohl's -- the department store outside the mall -- released financial results for its third quarter yesterday. The chain reported third quarter earnings per share of $0.68, compared to $0.45 during the same period a year ago. Analysts estimated that Kohl's would earn $0.64, so the company blew past its expectations pretty nicely.

Revenue for Kohl's increased 16.6% to $3.6 billion from the year-ago quarter of $3.1 billion and quarterly same-store sales increased 8.5% as well. Kohl's raised its earnings guidance for its 2006 fiscal year from the range of $3.04 - $3.13 per share to between $3.16 and $3.24 per share.

With both retailers J.C. Penney (NYSE:JCP) and now Kohl's Corp. (NYSE:KSS) reporting better-than-expected results for their most recent quarters, where is competitor Sears Holdings (NYSE:SHLD) going to land? And what about discounter Target Stores (NYSE:TGT) that also faces increased competition from resurgent retailers like Kohl's, Sears and J.C. Penney?

Sears, best known in history for its catalogs, will be landing its results on the day of November 16 , next Thursday. Stay tuned as I'll be covering what Sears is up to. And, if the competition is any sign, Sears may have a decent quarter coming up next week.