Retailers J.C. Penney Co Inc and Abercrombie & Fitch Co posted results that showed further evidence U.S. consumers were still cutting back on non-essential items, with Penney also warning profit for the year would be worse than analysts expected.

The recession, along with mounting job losses and credit worries, has hammered consumers, who are sticking steadfastly to shopping lists for groceries and other essentials, rejecting unnecessary purchases and seeking deep discounts.

While the conviction to buy only what they need has hit sales for department stores like Penney, consumers' desire for bargains has battered Abercrombie, which has stubbornly kept prices higher than rivals, other than discounting clearance items.

With a challenging economic environment, the consumer continues to show a reluctance to spend on premium brands; a price consciousness dictating shopping habits unlike anything I have ever seen, said Abercrombie Chief Executive Mike Jeffries, a retail industry veteran.

The teen clothing retailer posted a first-quarter loss wider than Wall Street's expectations, and said it was conducting a strategic review of its struggling Ruehl chain.

Meanwhile, Penney posted an in-line quarterly profit, but forecast second-quarter and full year results below analysts' expectations.

The mid-priced chain, which has been trimming inventories and offering fewer discounts to drive profitability, has tried to emphasize affordable prices and trendy items to entice cash-strapped shoppers.

But 2009 would remain rough, Penney warned.

We expect consumer spending and mall traffic to remain weak, which will be particularly evident against tough comparisons in the second quarter, Chief Executive Myron Mike Ullman said in a statement on Friday.

PENNEY TROUBLES

Penney's net profit was $25 million, or 11 cents per share, in the fiscal first quarter that ended May 2, compared with a profit of $120 million, or 54 cents per share, a year earlier.

Analysts expected a profit of 11 cents per share, on average, according to Reuters Estimates.

Sales fell 5.9 percent to $3.88 billion, while sales at stores open at least one year fell 7.5 percent.

Its troubles reflect the pressure in the department store sector -- earlier this week, rival Macy's Inc posted a 9.5 percent drop in first-quarter sales and stuck to its forecast for sales to fall for the full year.

For the second quarter, Penney forecast total sales to fall 7 percent to 10 percent, and a loss of 15 cents to 25 cents per share. Analysts expect a loss of 9 cents per share.

For the year, Penney expects a per-share profit of 50 cents to 65 cents, and same-store sales to fall about 9 percent.

Analysts expect a profit of 75 cents per share.

ABERCROMBIE MISS

Abercrombie's net loss was $26.8 million, or 31 cents per share in the first quarter that ended May 2, compared with a year-earlier net profit of $62.1 million, or 69 cents a share.

Analysts, on average, had expected a loss of 12 cents per share, according to Reuters Estimates.

Sales fell 24 percent to $612.1 million, while same-store sales fell 30 percent.

As a result of the strategic review of Ruehl, which posted a drop of 34 percent in sales at stores open at least a year, Abercrombie said it expects to record a noncash impairment charge of up to $55 million for the first quarter.

Abercrombie shares were down at $25.96 while Penney shares fell to $26.35 on the New York Stock Exchange.

(Additional reporting by Dhanya Skariachan in Bangalore; Editing by Dave Zimmerman)

Retail