J.C. Penney Posts Narrower First Quarter Loss, Lifts Margin Target

Department store chain J.C. Penney Co Inc (NYSE:JCP) reported a smaller-than-expected quarterly loss and lifted its annual gross margin target, helped by solid demand for women's apparel and home goods.

Shares of the company rose 1.6 percent to $8.85 in after-hours trade.

The company posted a loss of $167 million, or 55 cents per share, in the first quarter ended May 2, compared with a net loss of $352 million, or $1.15 per share, a year earlier. Excluding items, the loss was 57 cents per share.

Analysts on average were expecting a loss of 76 cents per share, according to Thomson Reuters I/B/E/S.

The Plano, Texas-based retailer said sales at stores open more than a year rose 3.4 percent in the first quarter, below guidance for 3.5 to 4.5 percent growth.

But the company said it now expects same-store sales to rise 4 percent to 5 percent in 2015, compared with a prior range for the year of 3 percent to 5 percent.

J.C. Penney's sales have been on the mend since abandoning the ill-fated strategies of former Chief Executive Ron Johnson, who tried to take the chain upmarket before departing in 2013.

Under CEO Mike Ullman, it reinstated traditional discounting and is focusing resources on a narrower set of product categories including apparel and home goods.

While it has been unable to translate that growth into profitability, the company said its gross margin improved 330 basis points in the first quarter to 36.4 percent of sales.

The company said it now expects gross margin to improve 100 to 150 basis points for 2015, up from a 50 to 100 basis points improvement under a prior forecast unveiled in February.

(Reporting by Nathan Layne in Chicago; Editing by Chris Reese and Alan Crosby)