J.C. Penney announced Thursday that its earnings and revenue for the vacation quarter exceeded analysts' expectations as the company said it had succeeded in reducing the glut of unsold inventory in 2018.
The Penney stock has grown more than 15% in pre-market news transactions.
Here's what Penney reported for the fourth quarter versus analysts' expectations, based on Refinitiv data:
- Adjusted earnings per share: 18 cents against 10 cents expected
- Turnover: $ 3.79 billion against $ 3.78 billion
- Same store sales: down 4% from 4.3% decline expected
The retailer announced net earnings of $ 75 million, or 24 cents per share, for the quarter ended Feb. 2, up from $ 242 million, or 77 cents a share, a year ago. Excluding non-recurring items, Penney gained 18 cents per share, 8 cents higher than analysts' forecasts based on a Refinitiv survey.
Revenues fell 8.4 percent to $ 3.79 billion from $ 4.14 billion a year ago. That was slightly above the forecast of $ 3.78 billion.
Sales in Penney stores that have been open for at least 12 months, on an off-schedule basis, comparing the 13-week period ending February 2 of this year to the most recent year, decreased by 4%, better than an expected decline of 4 , 3%.
The company said it was able to reduce inventories by 13.1% last year.
Since last fall, Penney has a new CEO, Jill Soltau, who has already begun to move things around at the retailer in order to straighten out her business. Penney struggled to manage his inventory – to get rid of worn out clothes to make room for new styles – and was not able to take advantage of his rival Sears' struggles as much as expected.
Since entering the chain of department stores, Soltau has already made the decision to close its stores and withdraw from the home appliance market, a category in which its predecessor, Marvin Ellison, had invested heavily. Soltau said that Penney, in turn, would invest more in clothing – devote even more space in stores to clothing and accessories. The verdict is still unresolved to know if this approach will work or not. Meanwhile, Penney promised to bring the products to market faster to keep up with the fast fashion cycles.
"Despite our past financial performance, we have already taken significant steps to improve key activities such as women's clothing, active clothing, special-size clothing and fine jewelry," said Soltau in a statement.
At the close of trading on Wednesday, Penney's shares fell nearly 70% in the last 12 months to trade around $ 1.30. Its market capitalization is approximately $ 412 million. In December, the stock plunged for the first time under the dollar mark.