J.C. Penney outperformed expectations for 1QFY14, uplifting investor confidence in the management’s efforts for a turnaround. The stock is up 17% in pre-market trading J.C. Penney Company, Inc. (JCP) rallied 18.3% in extended trading yesterday following the announcement of results for the first quarter of its 2014 fiscal year 2014 (1QFY14). The company outperformed analysts’ estimates for earnings and revenues. Although the company continued to make losses and burn cash into operations, it was able to strengthen its financial position through an upsized credit facility. The continuous fall in sales and the company’s deteriorating liquidity were the two most important concerns for investors. A turnaround in sales coupled with a strengthening financial position would reduce pressure on the management by uplifting investors’ confidence in the company. JC Penney: A Brief History The department store chain was founded in 1902, incorporated in 1913, and at one point, employed the founder of the world’s largest retailer Wal-Mart Stores, Inc. (WMT). JC Penney was revered by its customers for its apparel products as well as discount deals and coupons. Soon the business had built a large and loyal customer base. The company started to underperform its competitors after the 2008 recession due to lack of innovation at its stores and overused promotional techniques. Poor performance despite the economic recovery led to investors forcing the company’s CEO, Mike Ullman, to resign in 2011, and replaced him with Ron Johnson. Johnson worked with Apple Inc. (AAPL) as vice president of retail operations and was expected to turnaround JC Penney with innovation at stores and new growth strategies.