What happened

Shares of J.C. Penney (NYSE:JCP) have been left for dead in recent years, down more than 85% since late 2016. But the stock gained more than 11% by midday Friday after third-quarter results suggested the troubled retailer still has a pulse.

So what

J.C. Penney on Friday morning reported a third-quarter adjusted loss of $0.30 per share, significantly better than the $0.55 per share loss analysts had expected, on revenue of $2.38 billion, which came in short of consensus. The numbers indicate continued stress on the business. Comparable-store sales fell 9.3% year over year, and revenue was down 10% year over year.

A group on a shopping trip.

Image source: Getty Images.

But there were some positives in the results. Costs of goods sold fell to 64.6% of sales, down from 68.1% a year ago, with the improvement driven by an increase in margins both in the store and online. The company was also aided by its exit from the major appliance and in-store furniture categories earlier this year.

CEO Jill Soltau said the results show "significant progress," and that better days are ahead as the company works to increase foot traffic and improve its merchandise offerings.

"We are beginning to see results -- both in our numbers and how we operate as a business -- from the early implementation of our Plan for Renewal," Soltau said. "Going forward, I am confident that delivering our strategy, coupled with our ongoing discipline and commitment to improving the foundational elements of our business, will return J.C. Penney to its rightful place in the retail industry."

Now what

Things are not going to change overnight, and Penney still expects comps to decline in the range of 7% to 8% for the full year. The retailer still has its work cut out for it to avoid following longtime archrival Sears Holdings into bankruptcy, and the threat of the U.S. economy falling into a recession only makes the challenge more difficult.

But J.C. Penney if nothing else showed in its quarterly results that the plan that Soltau has put in place is having an impact, meaning there is at least a chance the venerable brand can be saved.