J.C. Penney Company, Inc. (NYSE:JCP) released its fourth quarter earnings report after closing bell, posting adjusted losses of 68 cents per share on revenue of $3.78 billion. Analysts had been expecting the retailer to report losses of 76 cents per share on revenue of $3.94 billion. And the better-than-expected losses were just the tip of the iceberg in terms of what the retailer announced tonight.

J.C. Penney

Breaking down J.C. Penney’s quarterly results

In the same quarter a year ago, J.C. Penney Company, Inc. (NYSE:JCP) reported revenue of $3.88 billion, although that quarter had an extra week in it. Net income was 11 cents per share and includes several items, including a negative 16-cent per share impact from restructuring and management transition. The company also reported a negative 8-cent per share impact from primary pension plan expenses. Positive impacts included a 15-cent per share gain from the sale of non-operating assets and an 88-cent per share “income tax benefit from continuing operations resulting in gains from other comprehensive income.”

During the fourth quarter, J.C. Penney Company, Inc. (NYSE:JCP) reported a 2% increase in same store sales compared to a year ago and a 680-basis point increase form the third quarter. Holiday sales during the November and December period rose 3.1%, while sales on the company’s website increased 26.3% for the quarter, excluding the 53rd week last year.

The retailer also said it generated $246 million in positive free cash flow and improved its gross margins by 460 basis points year over year. In addition, J.C. Penney Company, Inc. (NYSE:JCP) saved $205 million in SG&A expenses for the quarter and $392 million for the full year.

Examining J.C. Penney’s full-year results

For the full year, J.C. Penney Company, Inc. (NYSE:JCP) reported a 7.4% decline in same store sales and an 8.7% decline in total sales. Internet sales rose $59 million to $1.08 billion for the full year—a 5.8% increase over 2012. Gross margins for the full year fell 190 basis points to 29.4%, compared to last year’s 31.3% margin.

The retailer posted operating losses of $1.42 billion for the full year, which includes $215 million in restructuring and management transition charges. Excluding these items and the positive items already listed, J.C. Penney Company, Inc. (NYSE:JCP) reported adjusted operating losses of $1.24 billion.

J.C. Penney guides for 2014

J.C. Penney Company, Inc. (NYSE:JCP) also reported guidance for 2014, including an expected increase in comparable store sales of between 3% and 5%. The retailer expects to improve gross margins compared to last year’s first quarter and pay less tin SG&A expenses this year than it did last year.

For the full year, J.C. Penney Company, Inc. (NYSE:JCP) projects a mid-single digit increase in comparable store sales and a significant improvement in gross margins. It expects to have more than $2 billion in liquidity by the end of the year and spend about $250 million in capital expenditures.