• Q1 net loss falls 52% to US$167m
  • Net sales up 2.1% to $2.86bn
  • Same store sales up 3.4%

Analysts have given a luke-warm reaction to a narrowing of losses at retailer JC Penney in the first quarter, warning that the company "still has much to do" to turn its fortunes around.

Growth in women’s apparel and men’s boosted net sales and same store sales in the three months to 2 May, with all regions showing growth, but the best performances reserved for the western and central regions.

Gross margin increased 330 basis points to 36.4%, prompting CEO Mike Ullman III to hail a "solid performance", adding: "This year we are switching gears, going on the offensive to gain back share and grow our business profitably."

Marvin Ellison, president and CEO-designate, welcomed a "significantly improved performance" and said: "It is clear that our strategic initiatives are working to drive profitable sales growth."

JC Penney made a slight increase to its fiscal 2015 guidance, predicting same store growth of 4-5%, up from 3-5%.

However, UBS analyst Michael Binetti pointed out that first quarter comps were below guidance, with even the forecast lagging behind the +5.4% three-year comps target, some 18 months into the company’s turnaround strategy.

"While the growth in sales and gross profits indicates that JC Penney is heading in the right direction, the net loss of $167m acts as a reminder that the company still has much to do in terms of turning its fortunes around," added Conlumino CEO Neil Saunders.

"As such, we believe the new fiscal year will be another one focused on putting the firm back on track rather than one in which significant earnings are delivered."

Conlumino also believes plans to shutter 40 stores during 2015 do not go far enough.