(AP) J.C. Penney closes more stores after the Christmas season.
Net profit fell nearly 70% and a key measure for health fell 4% in the fourth quarter, the most crucial period of the year for retailers who are betting on strong holiday sales.
The company exceeded its expectations for fourth quarter results and, under new CEO Jill Soltau, the department store has cleared its unprofitable inventory and has announced that it will have a positive free cash flow this year.
Shares jumped more than 23% on Thursday.
Soltau, who joined the group in October, faces many challenges to avoid the fate of Sears or other retailers who have filed for bankruptcy protection or have gone missing.
Under Soltau, major appliances, which accounted for 2.7% of J.C. Penney's sales last year, weighed on the company's operating income.
Instead, it focuses on women's clothing and home products, such as towels or sheets, which generate higher profit margins. The furniture is always available, but only online.
This was reversed by predecessor Marvin Ellison, who, three years ago, started selling big appliances again in an attempt to take advantage of the problems at Sears.
At a teleconference Thursday, Ms. Soltau said she spent time with her customers, suppliers and workers. She is convinced that the company can establish a trajectory of "sustainable growth of profits".
The changes will be quick, methodical and based on what customers want and expect from J.C. Penney, Soltau said. "It's not as if nothing had happened," she said at a conference call Thursday. "Our current reality is clear."
Department stores like J.C. Penney are trying to reinvent themselves at a time when Americans are buying more online or turning to discounters like T.J. Maxx for clothing.
It is extremely difficult to bring back buyers, even for iconic brands.
The momentum seems to be slowing down at Macy's, which released the fourth quarter results this week. He reported lower overall profits and sales, as well as lower sales growth in traditional stores, a key measure for retailers' health.
Nordstrom publishes its results on Thursday night and Kohl's reports next week.
Of the four stores, only Kohl's has seen its stock increase over the past 12 months, but barely. Shares of Sears and J.C. Penney have lost more than 60% over the last year.
And the path to prosperity seems particularly tenuous for J.C. Penney. He is trying to find his way again after the disastrous reinvention plan of his former CEO, Ron Johnson, in 2012, which had significantly reduced his promotions and introduced new brands to attract young buyers.
Sales at J.C. Penney dropped in free fall, suffered huge losses and once loyal customers moved out.
The situation has stabilized but the establishment of an identity in a retail landscape that has undergone seismic changes continues to elude J.C. Penney.
"The main problem for (J.C. Penney) is that it no longer gives buyers reason to visit stores and make purchases," said Neil Saunders, managing director of GlobalData Retail. "In other words, she's lost sight of why she exists." This is evident in stores and online, where a mix of products is thrown together in seemingly random ways.
The company reduced inventories by 13% last year and this will continue throughout 2019. Soltau said that more streamlined stores will make it easier for people to find what they want.
New executive hires were also announced Thursday, including the chief merchant, the person who decides what goes on store shelves.
Saunders has so far praised Soltau's leadership, claiming that J.C. Penney's sentences were prior to her. But he said that time was limited.
J.C. Penney made a net profit of $ 75 million, or 24 cents per share, for the quarter. That compares to $ 242 million, or 77 cents a share, a year ago.
According to a survey by FactSet, the adjusted price per share was 18 cents per share, 7 cents better than analysts' forecasts. Revenues, including credit income, fell more than 8% to $ 3.78 billion, but were also better than expected.
Even though profits and sales fell, investors were delighted to find that it was not worse.
The shares jumped 30%, which brought the price back to $ 1.59 the unit. Before the economic crisis ten years ago, equities cost about $ 70.
The department store announced Thursday that it would extinguish light in 18 department stores, three of which were announced last month. It will also close nine home and furniture stores. There will be $ 15 million to pay for these closures in the first half of this year.