The department store chain reported on Thursday that comparable sales in November and December, the most important time of year for the retailer, rose 3.4%, well above Wall Street forecasts and a dramatic improvement over its 2016 holiday season performance, when business declined. Penney cited home goods, beauty items, and jewelry as key factors in the improvement. More crucially, apparel sales improved, a promising sign a few months after Penney had to take a hit to profits from massive markdowns on women’s clothing that was a big flop with shoppers.

The company, whose shares fell to record lows last year on concerns it was falling to grow despite its many initiatives, has invested in improving its e-commerce, from its app to stores’ ability to assist in e-commerce order shipping. It has sought to reduce its reliance on apparel, a declining category across retail, by shifting some of its business to large items like appliances. Still, the strong holiday results suggest Penney will report a third quarter of sales growth in a row. (The fourth fiscal quarter for most retailers includes January, and Penney will report those results next month.)

“We remain confident that our strategic initiatives are taking hold and resonating with customers,” said Marvin R. Ellison, chairman and chief executive officer of JCPenney.

But just like Macy’s, which announced better-than-expected sales only to see shares slide, Penney’s shares slipped after initially rising, likely because Penney’s gains were smaller compared to the retail sector’s as a whole: MasterCard Pulse said retail sales industrywide were up 4.9% during the holidays.

What’s more, Penney closed 138 stores in 2017, including many weak locations, which would make the comparisons with the previous holiday season easier. And despite the growth, which beat Wall Street forecasts for a 0.8% jump, Penney said it was reaffirming its previous forecast that comparable sales for fiscal 2017, will be flat to down 1% from a year ago.