JC Penney results beat estimates; shares soar

CNBC with Reuters
JCP beats on top and bottom line
JCP beats on top and bottom line

JC Penney reported a quarterly loss and revenue that beat analysts' expectations on Thursday, sending shares soaring after the bell Thursday.

On its conference call, CEO Mike Ullman told analysts there were "no major changes on the horizon" for succession. This marks a departure from earlier efforts by the company to replace Ullman, who returned to the helm last April after the ousting of Ron Johnson, the former Apple retail head who had led the retailer's failed attempt to attract higher-income customers.

After the earnings announcement, the company's shares rose 18 percent in extended-hours trading. (Click here to get the latest quotes for J.C. Penney.)

The company reported a first-quarter adjusted loss of $1.16 per share on $2.80 billion in revenue.

Analysts had expected the company to report a quarterly loss of $1.25 a share on nearly $2.71 billion in revenue, according to a consensus estimate from Thomson Reuters.

New credit facility

To strengthen its balance sheet, the retailer has obtained a new larger credit facility to replace an earlier one, maturing in April 2016.

"This financing is expected to provide better pricing terms and is expected to add $500 million of incremental liquidity during peak seasonal needs," the company said in a release, adding that it's expected to close during the current quarter.

A man looks at apparel at the J.C. Penney Co. store inside the Glendale Galleria shopping center in Glendale, California.
Patrick T. Fallon | Bloomberg | Getty Images

Comp sales rose 7.4 percent during the quarter. The retailer also said online sales that grew 25.7 in the quarter.

"Despite a difficult retail environment, our strong performance during the Easter holiday period and other key promotional events enabled us to deliver better than anticipated sales results," JC Penney CEO Mike Ullman said in a statement. "We expect to carry this momentum into the second quarter."

JCP said its gross margin rose to 33.1 percent of sales from 30.8 percent in the same quarter last year.

JC Penney outlook

For the current quarter, the retailer said it expects comparable store sales to increase mid-single digits, while gross margins are expected to improve sequentially in comparison to the first quarter.

For the 2014 fiscal year, the company forecast that its free cash flow will break even, adding that its gross margins are expected to "improve significantly" versus 2013.

The company has been counting on its relaunched home goods section to drive growth, bringing back many of the more affordable, no-frills brands that Johnson had ditched.

The retailer has also reduced space given to trendier brands that the former CEO thought would bring in new shoppers as it intensifies its fight for market share against rivals such as Macy's, Target and Kohl's .