NEW YORK (The Deal) -- Despite missing analysts' expectations for the year's fiscal third quarter, investors sent troubled department store operator J.C. Penney's (JCP) stock up more than 8% in afternoon trading Wednesday, Nov. 20, to close at $9.44 per share.

Shareholders' newfound optimism was based on company guidance for a brighter fourth quarter, as it said comparable store sales and gross margin were "expected to improve sequentially and year-over-year."

Yet third quarter numbers for the period ended Nov. 2, show that J.C. Penney is still on its way down, with comparable store sales declining 4.8%, revenues falling about 5.1% to $2.78 billion from $2.93 billion for the same period a year earlier, and a net loss of nearly $490 million.

The silver lining, according to J.C. Penney, is that comparable store sales increased 0.9% in Oct., a reversal of monthly comparable store sales declines since late 2011.

But trying to boost revenue through inventory clearance and promotional events to attain that all-important comparable store sales increases, also help drive down gross margins and increase losses. The company's gross margin dropped to 29.5% of sales in the third quarter, compared to 32.5% for the same period a year earlier.

Chief executive Myron "Mike" Ullman said in an earnings call Wednesday he expected a similar level of inventory clearance in the fourth quarter as in the third.

Fitch Ratings Service said in an Oct. 24 research note that gross margin needs to be between 39% and 40% on revenue 14% to 16% above 2013 projected levels for the company to fund ongoing capital expenditures in 2014.

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