NEW YORK (AP) — J.C. Penney's loss widened in the third quarter, but the results released Wednesday showed its business is starting to stabilize heading into the critical holiday shopping season.
The struggling department store chain is trying to recover from a botched transformation plan spearheaded by former CEO Ron Johnson that led to disastrous results. The board rehired the previous CEO, Mike Ullman and ousted Johnson in April, 17 months into his tenure.
Under Ullman, Penny is bringing back more frequent sales and basic merchandise eliminated by Johnson, who was trying to woo more affluent, younger shoppers. The strategy appears to be reversing the sales declines, but the question is whether the improvement can be sustained through the holiday shopping season and beyond.
Huge losses have taken a toll on the company, and analysts expect losses to continue into the first half of next year.
Penney and others are bracing for a fiercely competitive holiday season. The department store faces an uphill battle to woo its once-loyal shoppers back.
It amassed nearly a billion dollars in losses and its revenue dropped 25 percent for the fiscal year that ended Feb. 2, the first year of the failed transformation strategy.
For the traditional holiday shopping season kickoff, Penney is opening its doors at 8 p.m. on Thanksgiving, following other rivals like Macy's who are opening that day.
Last year, Penney was a late starter, opening its doors at 6 a.m. on the Friday after Thanksgiving.
Penney is also stepping up its holiday bargains compared with last year, when it cobbled together deals at the last minute.
In a statement released Wednesday, Ullman said that he is "encouraged" by sales in the early weeks of November.
"Our strategies to reconnect with customers are beginning to take hold, and this became increasingly clear as the quarter progressed," Ullman said.
The department store chain, based in Plano, Texas, said Wednesday that it lost $489 million, or $1.94 per share, in the three months that ended Nov. 2. That compares with a loss of $123 million, or 56 cents per share, a year earlier.
Revenue fell 5.1 percent to $2.78 billion.
The company's adjusted loss was $1.81 per share. Analysts expected a loss of $1.74 per share on revenue of $2.79 billion.
Revenue at stores open at least a year fell 4.8 percent for the quarter, but the period ended with its first monthly gain since December 2011.
Penney's gross profit margins have been hammered as Penney has had to heavily discount an oversupply of merchandise from the first half of the year. But the company said that gross profit margin improved to 29.5 percent in the quarter, compared with 32.5 percent last year.
Shares of J.C. Penney Co. are up 58 cents, nearly 7 percent, to $9.29 in premarket trading.
The stock has been hovering around $9, down 54 percent this year. The shares have lost 79 percent of their value since February of 2012, when investor enthusiasm was high on Johnson's transformation plan.