Shares in US department store JC Penney fell 3.4% in late trading as the retailer predicted a slower first three months of 2007 than had been expected.
The chain, which has more than 1,000 stores, also said higher tax bills meant profits had sunk 13% to $477m (£243.9) in the last quarter of 2006.
Demand for children's clothes and shoes helped sales grow 2.2% in the period.
Penney has been trying to lift its image, stocking more fashionable clothing and brand names.
However its own brands are more profitable, and made up 45% of sales last year, from about 40% in 2005.
Chief Executive Myron Ullman said February sales had been "soft" but said new spring fashions would help it bounce back.
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