JCPenney shows poor earnings but prepares for strong holiday season

Nov. 20 (UPI) -- After a long year for struggling retailer JCPenney, investors began to look more optimistically at the company Wednesday. The company reported poor earnings, but a strong outlook for the holidays.

This comes after retailers Walmart, Best Buy and Kohl's revised their forecasts downward due to increasing competition for holiday sales.

JCPenney shares shot 8.4 percent higher, to $9.44.

One Morningstar analyst, Paul Swinand, told CNBC that the brand isn't broken, and the stores look great with increasing cash flow. He expects shares to move up to $12, though a number of investors remain wary of the retailer's rebound.

Despite the strong outlook, sales for the quarter were weak. Sales fell 5 percent to $2.78 billion, though this compares with a loss of 27 percent in the year-ago period

Profits were also poor. The company lost $489 million, or $1.94 per share, compared with the same quarter in the previous year, when the company lost $123 million, or 56 cents per share.

The company looks to rebound from failed attempts to modernize the company's inventory, under the leadership of former Apple executive Ron Johnson. Johnson was ousted as CEO of JCPenney in April after almost two years of control, returning the company to former CEO Mike Ullman.

"The turnaround of J.C. Penney is beginning to take hold," Ullman said in a conference call with investors. The company's turnaround includes reconfiguring brands sold and bringing back previous popular brands and products.

Ullman added: "We are encouraged by today's potential first step in the right direction."

[CNBC] [USA Today] [Wall Street Journal]