J.C. Penney Posts Profit On Tax Gains, Stock Up 14%

(RTTNews) - J.C. Penney Co. Inc. (JCP) on Wednesday said its loss for the fourth quarter narrowed from a year ago, helped mainly by tax gains with sales slipping about 3 percent as the department chain struggles to return to its heydays. J.C. Penney shares gained 14 percent in after-hours trade on the New York Stock Exchange on top of a near 6 percent rally at the close of markets.

Excluding items, J.C. Penney's loss for the quarter was lesser than what Wall Street estimated while revenue missed expectations.

The company expects same-store sales to grow 3 percent to 5 percent for the current quarter and in the mid-single digits for 2014, with gross margins also in ascendant.

What set the recent quarter apart was a climb in same store sales during the holiday season after a gap of about two years.

Retailers overall have been a tough time. Last month, retail giant Wal-Mart Stores Inc. (WMT) said it will lay off about 2,300 employees at its Sam's Club warehouse unit, and Target Inc. (TGT) revealed plans to close eight U.S. stores in May.

In mid-Jan J.C. Penney disclosed plans to close 33 under-performing stores and lay off 2,000 employees.

For the fourth quarter, Plano, Texas-based Penney reported net earnings of $35 million or $0.11 per share, compared with net loss of $552 million or $2.51 per share last year.

Results for the recent quarter included, among other items, a tax benefit of $270 million mainly related to gains from annual re-measurement of pension plan and restructuring charges of $50 million.

Excluding items, adjusted loss for the quarter was $206 million or $0.68 per share, compared with loss of $427 million or $1.95 per share a year ago. On average, 19 analysts polled by Thomson Reuters expected of a loss of $0.85 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the fourth quarter dropped 2.6 percent to $3.78 billion from $3.88 billion in the prior year. Twenty-four Wall Street analysts had a consensus revenue estimate of $3.85 billion for the quarter.

Same store sales were up 2 percent from last year compared with a decline of 31.7 percent last year. Holiday sales climbed 3.1 percent. Online sales for the quarter jumped 26 percent to $381 million.

Gross margin for the quarter improved 4.6 percentage points to 28.4 percent, and operating expenses for the quarter dropped 27.4 percent to $1.2 billion.

J.C. Penney ended the year with more than $2 billion in total available liquidity and projects 2014 capital expense of about $250 million.

On Feb. 13 J.C. Penney announced the exit of its Chief Financial Officer Ken Hannah and named retail veteran Ed Record as interim CFO, effective March 24. The company did not divulge the reasons for Hannah's exit.

J.C. Penney stock closed Wednesday at $5.96, up $0.33 or 5.86%, on a volume of 37.6 million shares. In after hours, the stock gained $0.85 or 14.26% at $6.81. In the past year, the shares have traded in the range of $4.90 - $21.42.