J.C. Penney (NYSE:JCP) has been one of the more confusing retailers to follow. There are times when it has seemed the company has found a path forward in the current challenging retail environment and times when it appears that it will be another victim.

What happened

In Q1 the retail chain reported a drop in sales from the previous year falling from $2.8 billion to $2.7 billion. In addition comparable-store sales fell by 3.5% and the chain lost $180 million, or ($0.58) per share. That number however improves to a slight profit ($0.06 per share) when you factor out a number of one-time expenses.

The market reacted negatively to those results sending shares lower immediately after the company reported, and leaving the stock well down for the month. After closing April at $5.38, J.C. Penney shares finished May at $4.71, a 12% drop, according to data provided by S&P Global Market Intelligence.

JCP Chart

Image source: YCharts.

So what

Investors have become very vested in comparable-store sales when it comes to struggling retailers. That's an important metric, but it's not the only way to judge a turnaround. That's something J.C. Penney CEO Marvin Ellison tried to make clear in his remarks in the earnings release.

"We continue to make encouraging progress in the company's competitive and financial position despite our top-line performance during the first quarter.," he said. "...The recent sales trends, combined with the improvement in women's apparel and our growth initiatives led by Sephora inside JCPenney, jcp.com and major appliances, provide us with the confidence to maintain our sales guidance for the full year."

Ellison also cited his company's investment in pricing and merchandising systems delivering a 10 basis point increase in gross margin over last year. On top of that he mentioned that the chain has improved its financial condition and "earned yet another credit rating upgrade this quarter." 

Appiances are for sale in a J.C. Penney

Appliances have been a key part of the J.C. Penney comeback. Image source: J.C. Penney.

Now what

One quarter does not tell the story of a turnaround. J.C. Penney may not see same-store sales increases, but if it becomes profitable that's not relevant. Ellison has his company pointed in a positive direction. It may not be a steady ride back to success, but it still appears that's where the company is heading.