J.C. Penney Surprises Wall Street With Lower-Than-Expected Loss

NEW YORK (TheStreet) - J.C. Penney (JCP) shares surged in after-hours trading after the struggling retail chain surprised investors by reporting better-than-expected bottom line results for the fourth quarter.

The Plano, Texas-based company reported GAAP net income for the January-ending quarter of $35 million, or 11 cents a share. On an adjusted basis, the company reported a loss of $206 million, or 68 cents a share. Consensus estimates, according to Thomson Reuters, had called for an 85-cent quarterly loss.

Shares were rising 7.7% to $6.42 after the markets closed.

J.C. Penney's adjusted earnings did not include the following:

  • A 16-cent charge for restructuring and management transition charges;
  • An 8-cent charge for primary pension plan expense;
  • A 15-cent benefit from the net gain on the sale of non-operating assets; and
  • An 88-cent income tax benefit from continuing operations resulting from gains in other comprehensive income.

Fourth-quarter net sales fell 2.6% from the year-earlier quarter to $3.78 billion. Analysts had expected revenue to come in at $3.85 billion for the quarter, according to Thomson Reuters.

J.C. Penney had previously said that comparable store sales rose 2% in the quarter, with online sales specifically up $381 million for the quarter, or 26.3% versus the same period last year.

The retailer is forecasting comp sales between 3% and 5% for the first quarter.

Gross margin came in at 28.4% compared to 23.8% in the same quarter last year, representing a 460 basis point improvement.

The company noted that gross margin included a negative impact of 190 basis points associated with the discontinuation of brands that are not part of its current merchandising strategy. Gross margin was also negatively impacted by higher than anticipated clearance markdowns taken late in the quarter, it said.

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