Analysts who are getting out into J.C. Penney stores are finding some positive signs.
Oppenheimer & Co. issued a note Monday saying Plano, Texas-based Penney's recent promotions are showing "evidence of success."
"We are increasingly optimistic that the more price promotional stance that J.C. Penney is now assuming will allow the chain to make the most of a challenging holiday selling season and position it well to re-accelerate its aggressive turnaround strategy in 2013," the note said.
Analysts Brian Nagel, Rupesh Parikh and Erica Eiler spent the weekend visiting Penney stores in the New York and New Jersey area.
They found store traffic remained consistent with other December visits and much better than in prior months.
Markdowns were more aggressive. Clearance inventory was selling better, and some racks were cleared out. Inventory was light in home, which could represent lost sales; inventory has been moved out to make way for new brands coming in the early 2013.
"A move back to more aggressive price promotions represents a clear deviation from the strict EDLP (every day low price) strategy initially outlined by CEO Ron Johnson. That said, we think a hybrid promotional effort will improve cash generation and serve as a more steady traffic driver for JCP," the note said.
Johnson has been modifying pricing and marketing with more signs reflecting price cuts on merchandise throughout the store in addition to items that have been moved to the clearance racks.
