J.C. Penney's stock soars after sales beat expectations, lawsuit settled
J.C. Penney Co. Inc.'s stock surged 9.5% in premarket trade Wednesday, after the department store chain reported fiscal third-quarter same-store sales growth that beat expectations, and announced a settlement of a class action lawsuit alleging false advertising. Same-store sales rose 6.4% for the quarter ended in October, above the FactSet consensus of 5.7%. Chief Executive Marvin Ellison also said in a statement that gross margin and earnings for the quarter "exceeded our expectations." As part of the lawsuit settlement, the company will make $50 million available to settle claims. The lawsuit, which was filed in 2012, alleges J.C. Penney's practices surrounding price comparison advertising of private and exclusive branded products did not comply with California law. The company said it denies the allegations, but decided to settle the lawsuit to eliminate uncertainties and litigation expenses. "While we are confident of our position, resolving this litigation removes any uncertainty and risk, which we believe is in the best interest of our shareholders," CEO Ellison said. The stock has soared 34% year to date through Tuesday, while the S&P 500 has gained 1.1%.
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