JCP reports smaller loss than expected, stock jumps

A family exits a J.C. Penney Co. store at the Collin Creek Mall in Plano, Texas, on Sunday, Feb. 23, 2014.
Ben Torres | Bloomberg | Getty Images

JC Penney reported a quarterly loss that was smaller than expected on Wednesday, but revenue trailed analysts' expectations.

The company posted a fourth-quarter loss of 68 cents per share on $3.78 billion in revenue.

Wall Street had expected JC Penney to report a quarterly loss excluding items of 85 cents per share on $3.85 billion in revenue, according to a consensus estimate from Thomson Reuters.

After the earnings announcement, the company's shares rose as much as 15 percent in extended-hours trading.

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The retailer said its gross margin for the quarter was 28.4 percent, up 460 basis points from a year ago.

Paul Swinand, an equity analyst at Morningstar, told "Closing Bell" that better gross margins are needed for the company to generate positive cash flow, noting that the historical average has been between 38 to 39 percent.

For the year, the firm's gross margin decreased to 29.4 percent from 31.3 percent the year prior. Penney said it expects its gross margin for 2014 to improve significantly.

—CNBC.com's Drew Sandholm contributed to this report