J.C. Penney Company, Inc. (NYSE:JCP) shares skyrocketed more than 25% in after-hours trading Thursday after the company reported solid sales growth in the first quarter. The struggling retailer’s same-store sales jumped 6.2% to $2.80 billion, beating the company’s guidance of 3%-5% growth. Analysts polled by Thomson Reuters were expecting $2.71 billion in Q1 sales. In April, J.C. Penney witnessed an increase in customer traffic for the first time in 30 months.
Has J.C. Penney started recovering?
It’s the second straight quarter of sales growth for the company after nine consecutive quarters of decline. Strong sales growth is a sign that J.C. Penney Company, Inc. (NYSE:JCP) is recovering from the disastrous makeover attempts of the ex-CEO Ron Johnson. Johnson’s attempts to take the retailer up-market backfired as sales plummeted 25% in 2012. The Plano, Texas-based company brought back Mike Ullman last year. He refocused the business around the old-style coupons and promotions, and revamped its household goods section.
J.C. Penney Company, Inc. (NYSE:JCP) said its online business grew 25.7%, without providing a dollar figure. Selling, general and administrative expenses declined by $69 million to $1.01 billion, better than the company’s expectations. Gross margins also improved from 30.8% in Q1, 2013 to 33.1% in the latest quarter. J.C. Penney has also increased its credit facility from $1.85 billion to $2.35 billion, and has extended its maturity to boost the liquidity position.
J.C. Penney expects to break-even by the end of 2014
However, J.C. Penney Company, Inc. (NYSE:JCP) is still losing money. The company reported a loss of $1.15 per share or $352 million, compared to a loss of $348 million or $1.58 per share in the same quarter last year. Analysts polled by FactSet were expecting a loss of $1.24 per share. J.C. Penney forecasts a single-digit sales growth in the current quarter.
J.C. Penney Company, Inc. (NYSE:JCP) CEO Mike Ullman and other senior executives have been buying shares of the company to show faith in its future. Though the company board last year hired an executive search firm to replace him, Ullman has signaled that he will remain at the company. He expects J.C. Penney to break-even by the end of this year. For the full year, the company forecasts sales growth in mid-single digits.
J.C. Penney Company, Inc. (NYSE:JCP) shares were up 18.04% to $9.88 in pre-market trading Friday.