J.C. Penney Co. (NYSE:JCP) shares were down over 10 percent Friday morning, to $8.24, as investors punished the struggling retailer for a fourth-quarter earnings miss despite signs that its turnaround efforts are paying off in increased store traffic. The share price plummeted by more than 13 percent in premarket trading.

The steep sell-off followed the department store chain's earnings release after the closing bell on Thursday. And while the company reported positive sales figures, it missed heavily on profit expectations, as it spent handsomely throughout the holidays in an effort to attract its traditional discount-loving customers.

Still, Wall Street might be punishing the Plano, Texas-based company a little too harshly.

“I think the year ended on a nice note. I’m not disappointed,” retail industry analyst Marie Driscoll told the Dallas Morning News. “I’m not sure what people expected. This is going to be a slow process, and they’re holding their own and improving market share.”

J.C. Penney reported a loss of $59 million, or 19 cents a share, in the quarter ended Jan. 31, compared with a profit of $35 million, or 11 cents a share, in the same quarter the previous year. Analysts polled by Thomson Reuters expected the retailer to report a profit of 11 cents a share on a sales increase of 2.2 percent.

The retailer has been working on a costly turnaround from a disastrous attempt at trying to become a more upscale department store under former CEO Ronald Johnson. Johnson was the innovator of the Apple Store when he headed the tech company’s retail operations before moving to Penney in 2011. But he was fired in 2013 after alienating the company’s traditional budget-conscious customers with higher-end merchandise and the elimination of sales promotions.

“I believe 2015 will be an important year for J.C. Penney, and the team is focused on profitably executing our business,” CEO Mike Ullman said in the company’s regulatory filing posted after markets closed on Thursday. Ullman returned to the helm of the company after Johnson was ousted. J.C. Penney President Marvin Ellison, a former Home Depot vice president, will take over as the next CEO in August.

Fourth-quarter earnings were hit hard as the company rolled out expensive holiday promotions, but net sales increased $3.89 billion, up from $3.79 billion in the same quarter a year earlier, beating analysts' consensus estimate. Comparable store sales, a key measure of a retailer’s health, increased 4.4 percent, but the company is still healing from “self-inflicted wounds,” Ullman said. The company is now back to the 87 million customers it had in 2011, before Johnson’s failed strategy, the CEO added.

“They made an investment in winning back the customer,” Al Ferrara, retail partner at BDO, the global accounting firm told The New York Times. “I think they’re about to turn the corner, and the company’s here to stay.”