J.C. Penney Beats Christmas Blues

While other department stores and discount chains had a disappointing holiday season, J.C. Penney(JCP Quote) has had a bit to cheer about.

The Plano, Texas-based retailer reported on Monday that its department stores posted same-store sales gains of about 4.5% for December. Not only was that above J.C. Penney's own expectations, it bested the same-store sales reports of rivals such as Wal-Mart (WMT Quote), Federated (FD Quote) and Target (TGT Quote).

Same-store sales compare results at outlets open for more than one year.

Following J.C. Penney's report, both Salomon Smith Barney and Goldman Sachs raised their earnings estimates for the company's fourth quarter.

"We believe that J.C. Penney may be the only broadline retailer to exceed its sales plan for the holiday season," said Salomon Smith Barney's Deborah Weinswig in a report issued on Monday. (Salomon Smith Barney has provided investment banking services for J.C. Penney in the last year.)

J.C. Penney's December marks an impressive performance for a company that is in the middle of a turnaround plan and posted disappointing sales as recently as June.

Two years ago, when the turnaround effort began, the company closed its fiscal year with a loss of $705 million, or $2.29 per share, on flat sales compared with the year before. On the strength of its recent performance, Wall Street analysts expect J.C. Penney to post a profit this year of $1.15 per share on revenue of $32.5 billion, up 2% from last year.

The company's performance this year and this month in particular comes amid a tough time for the retail industry in general. ShopperTrak RCT has projected that retail sales in December will grow by just 1% over last year. Meanwhile, same-store sales at the retailers tracked by Instinet Research have grown by just 1.3% this month, the group said in its weekly Redbook Average report on Tuesday. Retailers had been expecting a gain of 2.1%, Instinet Research said.