J. C. Penney, whose stores help anchor hundreds of malls across the country, delivered fresh evidence Friday that the economy is faltering...

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PLANO, Texas — J.C. Penney, whose stores help anchor hundreds of malls across the country, delivered fresh evidence Friday that the economy is faltering in the face of higher gasoline prices and lower consumer confidence.

The department-store chain warned that first-quarter profit will be one-third lower than Wall Street expected, sending its shares tumbling nearly 14 percent at one point. The stock of other retailers dropped as well.

Chief Executive Myron Ullman said higher energy costs, a drop in hiring and weak housing and credit markets were weighing consumers down.

“Consumer confidence is at a multiyear low,” Ullman said in a statement. While tax refunds might help for a while, he said, “We expect the continuation of a difficult environment over the course of 2008.”

The company said it now expects first-quarter net income of about 50 cents per share, down from its earlier forecast for a profit of 75 cents to 80 cents per share. Analysts had been expecting 75 cents per share, according to a survey by Thomson Financial.

Sales at stores open at least a year — a key measurement in retailing — are expected to fall at least 10 percent this month and by a “high-single digit” percentage for the entire quarter, which ends May 3.

Penney didn’t say what parts of its business were suffering most, and officials declined to elaborate on the company’s statement. But analysts said they believed categories such as women’s and juniors’ clothing and linens were selling more slowly.

The grim news from Penney came as the Commerce Department reported that personal spending rose an anemic 0.1 percent in February — its smallest growth in 17 months — despite gains in personal income.

New concern

Penney’s announcement raised new concern about the prospect of a recession, because consumer spending accounts for about 70 percent of the U.S. economy.

“Consumer spending is typically glacial and slow-moving, but this time a big chunk came off,” said Richard Hastings, a retail analyst and economic adviser to the Federation of Credit and Financial Professionals.

The Conference Board reported this week that consumer confidence sank to a five-year low this month. Hastings said that uneasy feeling is compounded because consumers have less money to spend after shelling out more to buy gasoline, food and other staples.

Shares of Penney fell $3.04, or 7.5 percent, to $37.48 after dropping as much as 13.6 percent earlier in the day.

Stock in other retailers also fell. Shares of Kohl’s were off 4.9 percent, Macy’s lost 6 percent, Sears dropped 3.1 percent, and Target fell 2.5 percent.

Investors had good reason to be concerned, judging from the feeling among shoppers.

Chinwe Ezennaya, a mother of three boys under age 5, said she and her husband, a government worker, have cut back to afford necessities.

“Before, if I saw something on sale, I would buy it. Now I don’t buy it unless I really need it,” Ezennaya said. When she does buy clothes, she goes to Big Lots or Ross instead of department stores, and treats for the boys come from Wal-Mart instead of Toys ‘R’ Us.

Christina Vonderhaar, shopping in downtown Cincinnati, said she and her husband were cutting back to cope with higher prices. They now shop mostly at discounters such as Target and get DVDs at the library instead of buying or renting them.

“We’ve cut out everything extra,” said Vonderhaar, a systems coordinator. “We even cut out the Internet at home.”

From bright to grim

In recent years, Penney has been one of the brightest retailers, as it lured shoppers with reasonably priced private-label brands mixed with touches of affordable luxury such as cashmere, Sephora cosmetics counters and, just this year, an expensive line of clothing and home goods from Polo Ralph Lauren called American Living.

Dana Cohen, an analyst with Bank of America, said American Living could be contributing to the lower profit estimates. She said the new line is priced “well above” the competing Chaps brand at Kohl’s, just when consumers are growing more worried about prices.

Penney fights a two-front war, competing against Kohl’s, Wal-Mart and others for budget-minded shoppers, along with Macy’s and other department stores.

Penney operates more than 1,000 department stores with 155,000 employees. It had sales of $19.86 billion last year.