J.C. Penney rallies with solid Q2, suggesting turnaround

Plano, Texas -- J.C. Penney answered Wall Street questions about whether or not the struggling department store retailer could stage a comeback — by posting better-than-expected profit and revenue in the second quarter.

Analysts have been awaiting results, many saying that if Penney could manage to beat projected same-store sales or cut its forecast deficit, it could become an analyst darling. Penney started to regain the trust of a few watchers earlier this year when it reported a first-quarter same-store sales increase of 6.2%, trumping the 4.1% gain that had been projected.

For the quarter ended Aug. 2, Penney reported a same-store sales rise of 6%, edging the projected 5.8% gain. Revenue improved for the third consecutive quarter, to $2.8 billion from $2.66 billion in the year-ago period. Wall Street expected revenue of $2.79 billion. E-commerce was a big quarterly winner, improving 16.7% year-over-year to $249 million.

Penney narrowed its year-ago loss of $586 million to $172 million this year.

Penney has faced an uphill battle, trying to rebound from former CEO Ron Johnson’s overhaul efforts that resulted in plummeting sales, internal splintering, and 10 consecutive quarters of missed revenue projections. Thursday’s report has lifted Wall Street spirits.

"Our turnaround initiatives continue to produce improved financial results," CEO Myron Ullman said in a statement. "In the second quarter, we gained additional market share while significantly increasing gross margin in a highly competitive promotional environment."

Penney said it expects sales to rise in the mid-single digits in the current quarter and backed its outlook for the year. It expects full-year same-store sales growth in the mid-single digits.

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