This story has been updated from 12:10 pm EST with stock price change.
NEW YORK (TheStreet) - J.C. Penney (JCP - Get Report) shares plummeted 10.6% to $5.08 on Tuesday after it reported comparable sales for the fourth-quarter rose 2%. This is the first time since the second-quarter of 2011 that the struggling department store chain generated a positive quarterly sales result, but apparently the growth was not enough to impress investors.
The Plano, Texas-based company said for the nine-week November and December period, comparable store sales rose 3.1% over the same period last year. Sales via jcp.com jumped approximately 26.3%.
J.C. Penney closed its 2013 fiscal year with total available liquidity in excess of $2 billion.
"While 2013 brought a lot of change and challenges to JCPenney, the steady improvements in our business show that the company's turnaround is on track. In spite of the significant headwinds facing all retailers this season, including unprecedented harsh weather conditions in many parts of the country, we delivered on our promise to generate positive comparable store sales growth in the fourth quarter," J.C. Penney's CEO Myron E. (Mike) Ullman, III said in a statement.
J.C. Penney reported "solid performance" in several categories including, beauty (Sephora), activewear, sweaters, outerwear, dresses, boots, men's clothing, luggage and housewares.
The news comes as the struggling retailer spooked investors last week when it reported simply that it was "pleased" with its holiday sales performance and that customers "responded well to the company's offerings this holiday shopping season, both in store and online." The company had reaffirmed its outlook for the fourth quarter of sequential and year-over-year improvement of fourth-quarter sales comps and in gross margin.
Despite positive sales comps, J.C. Penney isn't expected to post a profit for the quarter. Analysts, according to Thomson Reuters, expect a loss of 76 cents a share on revenue of $3.93 billion.
"While posting a +2.0% comp in 4Q is a step in the right direction, the slope of the improvement continues to disappoint," Sterne Agee analyst Charles Grom wrote in a note. "Equally concerning, our math suggests comps were negative (say 1%) during the December period, which frankly is just unacceptable given the compare. Net, odds of another cash infusion just augmented meaningfully."
Grom rates shares "neutral." He now expects J.C. Penney to post a loss of $1.05 a share for the quarter and dropped his price target to $3 from $9.
"Importantly, unlike prior sales updates, management failed to provide any color on traffic, conversion, or AUR," Grom wrote. J.C. Penney "needs the improvement to be much better than currently tracking and it is becoming increasingly critical that the company starts to see meaningful improvement if it is to survive as currently constituted."
J.C. Penney announced last month that it was closing 33 stores and eliminating 2,000 positions in order to focus on stores with "highest potential growth opportunities." The company will announce its full results for the fourth quarter on Feb. 26, after the market closes."JCPenney's combination of relevant and giftable merchandise, outstanding customer service, and compelling promotions enabled our teams to drive sales in a difficult and competitive environment for retailers this holiday season," Ullman said. "As we look ahead to 2014, our associates are encouraged by the company's results and we remain steadfast in our focus to build on these achievements and return to profitable growth."
JCP data by YCharts
--Written by Laurie Kulikowski in New York.