J.C. Penney Co. Inc. (NYSE: JCP) reported second-quarter fiscal 2015 results before markets opened Friday morning. The venerable retailer reported an adjusted diluted loss per share of $0.41 and $2.88 billion in revenues. In the same period a year ago, J.C. Penney reported a net loss of $0.75 on revenue of $2.8 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for a net loss of $0.48 and $2.86 billion in revenue.

Same-store sales rose 4.1% in the quarter. The consensus estimate called for a gain of 3.9%, against a strong prior year increase of 6%. In the second quarter of 2013, same-store sales fell nearly 12%.

Gross margins rose by a full point to 37%, up 0.4% sequentially. J.C. Penney said that the increase was driven by improvements in its clearance and promotional selling margins.

For the remaining half of the fiscal year, J.C. Penney said that same-store sales are expected to rise 4% to 5% and gross margin is expected to rise by 100 to 150 basis points. Free cash flow for the year is expected to break even. J.C. Penney also raised its estimate of EBITDA from a prior level of $600 million to $620 million.

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The consensus estimates call for a third-quarter loss of $0.53 per share on revenue of $2.86 billion. Full year estimates include a net loss of $1.27 on revenues of $12.57 billion.

The company’s CEO, Marvin Ellison, said:

Although we have significant work to do as a company to regain our status as a world-class retailer, I am pleased with the resilience and the efforts of our associates. I also remain confident in our ability to achieve the long-term financial targets we have laid out.

J.C. Penney’s second-quarter performance is a marked improvement over expectations and over the showing of the past couple of years. The company continues to post loses, but same-store sales are improving and the store’s pricing policies on clearance and promotional items finally appear to have found their footing. How long will it be before J.C. Penney shows a profit? At the pace it is going, another two or three years seems like a good bet. Does the company have that much time?

The stock closed down nearly 2.4% on Thursday to $8.07. In Friday’s premarket session, shares traded up about 1.6%, at $8.23 in a 52-week range of $5.90 to $11.30. Thomson Reuters had a consensus analyst price target of around $8.89 before the results were announced.

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