JC Penney shares were up as much as 16% in early trading after the retailer reported sales that beat estimates.

Same-store sales climbed 6.2%, compared with forecasts for 4.2%. Net sales came in at $2.8 billion compared with expectations for $2.7 billion. Gross margin for the quarter came in at 33.1%, in line with expectations. Loss per share came in at $1.16, which was narrower than the $1.25 loss expected by analysts. The company announced it had received a new, larger credit line.

Sterne Agee's Chuck Grom says it's the first time in 30 months Penney reported positive same-store sales growth in April, and that some of it may have been driven up by Easter. But he offered four reasons for remaining bullish:

1) the absolute comp of 6.2% was better than our model (+2.0) and a touch higher than buy-side real expectations of ~4.0% – favorably the trend improved throughout the quarter – echoing sentiment we have heard from most department stores (by category women’s/men’s apparel, home, and fine jewelry were called out); (2) we were impressed that JCP was able to reduce inventory levels, which were up only 1.3% at the end of the quarter versus the company’s sales increase of 6.3%; (3) SG&A expenses remain well controlled, down significantly YOY, fueling much of the aforementioned EPS beat; and (4) JCPenney reiterated its $2.0B liquidity outlook for year end and replaced its existing $1.85B ABL Bank Line with a new $2.35B senior secured ABL credit facility. (The program is constrained by the borrowing base; i.e. when inventory levels are lowest; JCP will not be able to tap the entire amount.) 

Shares were trading as high as $9.75.

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