JC Penney shares were up more than 24% in after-hours trading after reporting higher than expected Q1 sales growth.
Same-store sales were also strong, rising 6.2% compared with forecasts for 4.2%.
Net sales were also topped $2.8 billion compared with expectations for $2.7 billion.
Gross margin for the quarter came in at 33.1%, in line with expectations.
Earnings loss per share beat by $0.09 at $1.16. The firm announced it had received a new, larger credit line.
After hemorrhaging sales, along with a CEO, over the past couple of years, Penney seems to have bottomed out. Shares have declined 74% since trading around $25 in 2012, but are up 40% over the past three months. They now trade at about $9.
Retail analyst Brian Sozzi is bullish:
…we think when weather has been cooperative throughout the U.S in the first quarter, JC Penney is sucking in a good bit of mall traffic via a combination of effective promotional messaging (we are seeing more consistent promotions in the store, not intra-quarter spikes in worrying “% off signs” as was evident during the holidays), better in stocks on name brand merchandise and basics, and stores that are finally cohesive in terms of layout (home department finagling has concluded).
Mash up these store level observations, and considering the stock’s relative outperformance during the recent broader market pullback, and a sensible inference is that the return of the old, somewhat boring JC Penney is enough to deliver a key holiday 2014 performance that removes bankruptcy concerns and the need to raise further penalizing capital. Such an assumption…not priced into the stock.