J.C. Penney Co. Inc. (NYSE: JCP) reported second fiscal quarter 2014 results after markets closed Thursday afternoon. The venerable retailer reported an adjusted diluted earnings per share (EPS) loss of $0.75 and $2.8 billion in revenues. In the same period a year ago, Penney reported an EPS loss of $2.16 on revenue of $2.66 billion. Second quarter results compare to the Thomson Reuters consensus estimates for an EPS loss of $0.93 and $2.79 billion in revenue.

On a GAAP basis, Penney posted a quarterly EPS loss of $0.56.

Same-store sales rose 6% in the quarter. Online sales rose 16.7% year-over-year to $249 million. Gross margins were rose from 29.6% a year ago to 36% in 2014.

Penney’s said that same-store sales are expected to rise in the mid-single digits in the third quarter of 2014 and gross margins “are expected to be in-line with the second quarter.” For the full year same-store sales are forecast to increase in the mid-single digits and gross margin is expected to “improve significantly.” There has been no change in this forecast since it was issued at the end of the fourth quarter of 2013.

None of this means that the same-store sales will be positive, although with the awful results posted in 2013 it’s difficult to see how Penney’s can miss. For comparison, same-store sales in the third quarter of 2013 were down 4.8%, which was an improvement from the drop of 11.9% from the prior year. Same-store sales were up 0.9% in October, the first gain the company has seen in two years.

The company’s CEO said:

Our turnaround initiatives continue to produce improved financial results. In the second quarter, we gained additional market share while significantly increasing gross margin in a highly competitive promotional environment. … As we approach the completion of our turnaround, we are focused on reestablishing JCPenney as the premier shopping destination for the moderate consumer.

J.C. Penney has reported a loss for the past 10 consecutive quarters. It has also lost money on an after-tax basis for three years in a row, as well as significant drops in revenue. This year is expected to be the start of the recovery in revenues.

One reason that Penney’s results look so good is that the comparisons are so easy. Same-store sales plunged for two years and didn’t make it back into the black until October of last year. Margins were just as bad and really had nowhere to go but up.

To give the company and CEO Mike Ullman credit, they have been able to slow if not completely stop the bleeding. What happens during the holiday season could be decisive for Penney’s.

Shares are up more than 5% in after-hours trading, at $10.24 in a 52-week range of $4.90 to $14.65. Thomson Reuters had a consensus analyst price target of around $9.40 before today’s results were announced. One analyst, though, maintains a price target of $2.50.

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