J.C. Penny Co. (NYSE: JCP) reported better-than-expected 2015 fourth quarter results on Tursday night. Shares of the department store company soared on Friday`s trading as the earnings results easily beat estimates. J.C. Penny reported a 2.6 percent boost in revenue to $4 billion in the period, which toped Zacks consensus estimates of $3.99 billion. The quarterly earnings increase to $0.39 a share, beating Wall Street`s Estimate of $0.23. It is also worth noting that the same-store sales for this quarter increased 4.1% with home furnishings, Sephora beauty brand and handbags being the most popular areas. Shares of the company sored more than 13 percent in today`s trading.
Marvin Ellison, CEO of J.C. Penney, outlined some basic reasons for the company`s quarterly success on the conference call. It is said that the company`s “intense focus on value” helps them “regain market share from that what was lost from 2011 to 2013”. Besides, J.C. Penny has developed “true omni-channel capabilities” to repair its online business, which allow them to have “seamless connection” with their customer. These new capabilities led to nearly a 40% increase on record online performance in this quarter. Besides, Sephora inside J.C. Penney and the reestablishment of key private and exclusive brands continue to be “a point of differentiation”. These special sales policies make J.C. Penny to be one of the top-performance clothing retailers in this unusually warm winter.
J.C. Penny recently launched 1-cent deals offering certain items in its private label collections for just 1 cent. The program, with a slogan of “Get your Penney’s worth”, is a new market strategy inspired from supermarkets and warehouse clubs. Yet investors should also notice the company`s high debt management risk and disappointing return on equity before taking action.