J.C. Penney Company, Inc. (JCP) posted a wider net loss for the fiscal third quarter owing reduced margin resulting from heavy promotions to attract more customers. The retailer reported a 25% fall in sales primarily due to abandoning of discounts and some of the popular merchandise by former CEO Ron Johnson.

Turnaround producing results

For the quarter, Penney posted a net loss of 489 million, or $1.94 per share against a net loss of $123 million, or 56 cents per share, last year. For the quarter, Gross margin fell 3% to 29.5%, but the retailer revealed that the margins showed a rising trend each month, in the quarter. Compared to other retailers, gross margin was on the lower side with 39.9% for Macy’s, Inc. (M) and 37.5% for Kohl’s Corporation (KSS).

Earlier this year, the retailer raised $2.25 billion in financing, and in September, the company raised additional $800 million in the stock offering.  During the third quarter, J.C. Penney paid back down $200 million on its revolving credit facility. At the end of the third quarter, total debt for the company stood at $5.61 billion.

Ullman, who was the CEO prior to Johnson, took control back in April, and since then has been aggressive in lowering prices and bringing back store brands such as St. John’s Bay clothing.

During the earnings call, Chief Executive Myron Ullman told “The turnaround at J.C. Penney is beginning to take hold.”

Much depends on holiday quarter

For the holiday quarter, the struggling retailer expects higher comparable store sales as the sales in November have been good so far. The company reiterated its forecast of over $2 billion in liquidity.

The declining sales till September raised concerns over the retailer’s future prospects.  J.C. Penney reported its first monthly comparable sales gain in October, in last two years. The retailer expects business, gross profit margin to stay on track in the fourth quarter, as well. Also, the company expects a reduction in selling, general and administrative expenses when compared to last year.

During the last holiday quarter, comparable sales were down 31.7%. Analysts at Gilford Securities expect the comparable sales to rise by around 15% in the fourth quarter, according to Reuters.

Analysts are of the opinion that the results indicate a right momentum, but the scenario will clear out in the fourth quarter.