The retailer reported a smaller than-expected-loss and strong sales growth that gave credence to arguments that returning CEO Myron Ullman's plan to bring back the old, discount-heavy J.C. Penney -- while retaining the cleaner, "high-end" store look -- is working. Prior CEO, Ron Johnson, had tried to cut back on clearance sales and other markdowns in an effort to make the brand more of an equal to, say, Macy's (M).
Shares climbed more than 18% Friday morning to just below $10. And StockTwits.com users anticipated more gains as shorts were forced to cover positions. Short interest in JCPenney is 31.28% of float, according to statistics on shortsqueeze.com.
$JCP Decision time. Should I double down now for short squeeze to come over next few days.? Bob Sparks (@Happyinvestor) May. 16 at 09:46 AM
JCPenney said same-store sales rose 6.2%, exceeding prior guidance. It reported net sales of $2.8 billion, beating consensus estimates by $90 million. JCPenney also said margin improvement helped it report a smaller loss than anticipated, $1.15-per-share versus the $1.25 Wall Street had expected.
"It is clear that our efforts to re-merchandise many areas of the store and revamp our messaging to the customer are taking hold," said Ullman, in a statement. "Despite a difficult retail environment, our strong performance during the Easter holiday period and other key promotional events enables us to deliver better than anticipated sales results."