(Adds CEO comments and updates shares)

Feb 26 (Reuters) - Shares of department store chain J.C. Penney Co Inc tumbled 12 percent in after-hours trade on Thursday after it posted a surprise quarterly loss and forecast small margin improvements this year.

J.C. Penney said sales at stores open more than a year rose 4.4 percent in the holiday quarter, the high end of its guidance for 3.5 to 4.5 percent growth, driven by demand for men's apparel, jewelery, and home goods.

"We grew sales and gained market share in a highly competitive environment," Chief Financial Officer Ed Record said on an earnings call.

But operating expenses ticked higher and it failed to make money, disappointing investors. The stock fell 12 percent to $8.04 in after-hours, from a close of $9.12.

J.C. Penney posted a loss of $59 million, or 19 cents per share, in the fourth quarter ended Jan. 31, compared with a profit of $35 million, or 11 cents, a year earlier. The year-earlier results included a one-time tax gain of $270 million.

Excluding items, J.C. Penney broke even on a per share basis, compared with the consensus for a profit of 11 cents per share, according to Thomson Reuters I/B/E/S.

J.C. Penney's sales have been on the rebound after abandoning the ill-fated strategies of former Chief Executive Ron Johnson, who tried to take it upmarket. Under CEO Mike Ullman it reinstated discounting and is focusing on a few categories including apparel and home which it calls "center core".

The company said it expected comparable sales to grow 3 to 5 percent this fiscal year, after growing by 4.4 percent in 2014, and for gross margin to improve by 50 to 100 basis points, after expanding by 540 basis points to 34.8 percent last year.

On the call analysts asked why executives appeared to be so conservative with guidance on sales and margin and whether it was sticking to growth plans, unveiled in October, for 2015 to 2017.

Ullman said they were standing by those forecasts, which include achieving $1.2 billion in earnings before interest, tax, depreciation and amortization, generating mid single-digit sales growth and a gross margin of 36.5 percent.

"The center core initiatives pretty much don't start until the fall season this year so that benefit will gain momentum throughout the three years," Ullman said, adding that business in February was so far ahead of its plan.

(Reporting by Nathan Layne in Chicago and Nayan Das in Bengaluru; Editing by Saumyadeb Chakrabarty and Andrew Hay)