Written by StockNews.com

J. C. Penney Company Inc. (NYSE: JCP) early Friday [Feb 24, 2017 | 7:09am ] posted better than expected fourth quarter profits, as it swung to its first full-year positive net income in seven years.

The Plano, TX-based department store operator reported Q4 EPS of $0.64, which was $0.03 better than the Wall Street consensus estimate of of $0.61.

Revenues fell 0.9% from last year to $3.96 billion, roughly in-line with analysts’ $3.97 billion view.

On a sour note, JCP said that comparable store sales (comps) fell 0.7% in the latest period. Comps are considered a key indicator of a retailer’s health, since they measure only the year-over-year performance of stores open at least 12 months.

Gross margins also fell to 33.1% of sales in the period, below estimates for 34.3%. Margins were hampered by increased promotional activity (discounts).

The company noted that its Home, Sephora, Salon and Fine Jewelry were its top performing merchandise segments during the fourth quarter. In terms of geographic performance, Southeast and Pacific regions stood out among all locations.

Looking ahead, JCP forecast full-year EPS of $0.40-0.65 which straddles Wall Street’s $0.58 estimate. Comps are seen between -1% and +1%, while gross margins are forecast rising 20 to 40 basis points.

As part of its ongoing restructuring plan, J. C. Penney plans to shutter two distribution facilities and about 130-140 stores over the next several months, or about 13-14% of its total store footprint. Those closures, which target the worst performing stores that drive just 5% of its total sales, should drive $200 million in cost savings.

The company commented via press release:

“We are pleased that in the face of a very challenging 2016 retail environment we delivered our first positive net income since 2010. As recent as 2013, JCPenney reported a net loss of nearly $1.3 billion, or ($5.13) per share, and negative EBITDA of $641 million. This year, we delivered positive net income and generated EBITDA of over $1 billion. This is a reflection that the growth initiatives we laid out at our analyst meeting are working. These initiatives drove significant category growth in the fourth quarter, and provide us a platform to build upon in the years to come.

...Year-to-date, JCP has declined -17.45%, versus a 5.78% rise in the benchmark S&P 500 index during the same period.

JCP currently has a StockNews.com POWR Rating of D (Sell), and is ranked #50 of 67 stocks in the Fashion & Luxury category.