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J.C. Penney Profit Climbs, Beating Forecasts; Outlook Raised

JC Penney
JC Penney

J.C. Penney reported a higher quarterly profit as private-label brands helped margins, and the department store operator raised its full-year earnings forecast.

Shares rose as high as $79.90 .

Earnings increased to $238 million, or $1.04 a share, for Penney's fiscal first quarter, ended May 5, from $210 million, or 89 cents a share, a year earlier.

Analysts on average expected a profit of $1.03 a share.

Sales rose 3.1% to $4.35 billion, below analyst expectations of $4.47 billion. Comparable store sales, a measure of sales at stores open at least a year, rose 2.2%.

Penney, which has been working to shed its dowdy image by offering more fashionable merchandise such as its Ambrielle brand of intimate apparel, kicked off a new branding campaign called "Every Day Matters" earlier this year in hopes of luring new customers and getting current shoppers to spend more money.

Over the next few years, Penney expects results to benefit from 250 new stores, including its first store in New York's Midtown Manhattan, and the roll-out of exclusive brands such as American Living, a line of clothing and home goods by Polo Ralph Lauren Corp.

The company said gross margin improved by 70 basis points to 41.5% of sales, helped by strong sales of its private apparel brands.

For the full-year, the retailer said it expects earnings from continuing operations "in the area" of $5.49 a share, up 5 cents a share from its previous forecast.

Analysts, on average, are expecting full-year earnings of $5.52 a share.