JC Penney: Something for Everyone in Earnings Beat

Just like its stores, JC Penney’s (JCP) financial results had something for everyone–and shares of the beaten-down retailer have jumped as a result.

JC Penney report a loss of $1.15 a share, beating the Street consensus for a loss of $1.25, on sales of $2.8 billion, beating forecasts for $2.71 billion. Same-store sales rose 6.2%, above forecasts for 4%. JC Penney also said that its gross margin rose to 33.1% of sales, up from 30.8% from the same quarter a year ago. For those worried about JC Penney’s cash, the company said that it had received a $2.35 billion credit line to replace a $1.85 billion one.

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Of course, JC Penney’s financial results would be incomplete without its guidance. For the full year, JC Penney said it expects same-store sales to “increase mid-single digits,” while gross margin should “improve significantly versus 2013.” Free cash flow should be breakeven, JC Penney said.

Color Belus Capital’s Brian Sozzi impressed:

JC Penney's 1Q14 report basically says this in a nutshell: the return to old school department store retailing principles (promotions), with an infusion of flare in key departments (teens, athletic wear), is a recipe that could bring the company to the land of profits for the upcoming holiday season.  Believe me, it's almost unimaginable to utter such words after having a sell rating on the stock for two years, and only issuing an upgrade on April 10.

But, push comes to shove, when the weather was conducive to spending the better merchandized JC Penney reconnected with its lapsed customers, disenchanted Target (TGT) customers (Target's apparel section in men and women has gotten very, very poor), and Kohl's (KSS) customers to deliver a quarter that removes the company further away from the bankruptcy equation.

Shares of JC Penney have gained 18% to $9.84 at 4:12 p.m. in after-hours trading, after dropping 2.8% today. Target has ticked up 0.1% to $58.26 after falling 1.8% today, and Kohl’s has risen 0.6% to $52.53 after declining 3.4% today.