J. C. Penny Co. reported that its first-quarter profit fell by 50 percent on lower consumer spending and it forecast a similar profit drop for its current quarter.

The third-largest U.S. department-store chain reported on Thursday that first-quarter net income fell to $120 million or $0.54 per share, compared to $238 million or $1.04 per share in the same period last year.

Market analysts surveyed by Thomson Financial expected earnings of $0.49 per share on average.

In a conference call with analysts, the company said it has an selection of plans to improve operations.

One of the areas J.C. Penney executives emphasized is bringing down excess inventory. The company is also continuing to roll out new merchandise with hopes that fresh concepts will boost sales.

Chairman and Chief Executive Myron Mike Ullman said the retailer witnessed a precipitous drop in store traffic in March, leaving it with unsold Easter holiday merchandise.

We obviously planned Easter like it was going to happen and, without being too flippant, it didn't, Ullman said at the meeting.

Sales suffered due to lower spending and fewer store visits by consumers due to higher gasoline and food prices, coupled with a declining housing market.

It's obviously a very difficult time for all U.S. consumers, said Ullman.

Our financial performance in the first quarter was clearly impacted by the weakened consumer environment.

Looking ahead, we will continue to take the necessary actions to align our business plans with the expectation that conditions will remain difficult for the remainder of 2008, Ullman added.

Meanwhile, the retailer's total net sales for the first quarter fell by 5 percent to $4.13 billion, compared to $4.35 billion reported during the same quarter a year ago.

Shares of the firm were up by 1.5 percent to $45.73, during afternoon trading on the New York Stock Exchange.