J.C. Penney expects sales, gross profit to improve this year

Shares were up 2.8 percent to 6.13 in afterhours trading after rising 5.7 percent during the regular session.

Penney said it expects comparable sales to be up by a "mid-single digit" percentage for this fiscal year. They rose 2 percent during the quarter that included the holiday season, their first gain in nearly two years.

Penney Chief Executive Mike Ullman, who returned to the helm in April after sales went into free fall due to a failed attempt to go up-market in 2012, said the company's turnaround "remains on course."

Penney's gross margin, a gauge of merchandise profit, rose 4.6 percentage point to 28.4 percent of sales, below analyst projections for 30.5 percent of sales, according to Thomson Reuters I/B/E/S, because of higher than anticipated markdowns on clearance merchandise.

But the company said it expects gross margin, which historically has been around 39 percent of sales, will improve "significantly" this year.

For the fourth quarter ended Feb 1, Penney reported net income of $35 million, or 11 cents per share, compared with a loss of $552 million, or $2.51 per share, a year earlier.

Excluding one-time items, Penney had an adjusted loss of 68 cents per share during the quarter.

Penney is trying to stanch enormous losses and win back shoppers after a 25 percent drop in sales in fiscal 2012. Those sales declines continued in the first three quarters of its last fiscal year.

Penney said it expects to have $2 billion in liquidity at year end, the same level as at the start of the fiscal year.

(Reporting by Phil Wahba in New York; Editing by Cynthia Osterman)

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