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Penney’s 2Q results show some signs of life

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Under Ullman’s leadership, Penney is bringing back store label brands like St. John’s Bay that were eliminated by Johnson. The company also is working to restage the home departments in the 500 stores where new designers like Jonathan Adler and Michael Graves were added.

Ullman said that early feedback from customers made it clear that they want a more balanced assortment of trendy and traditional merchandise. Ullman also said that Penney will be rebuilding areas for luggage, frames and window coverings, which were cut back under Johnson.

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Besides worries about the company’s merchandising strategy, a big concern has been that Penney does not have enough cash on hand to fund its turnaround. But on Tuesday, Penney reiterated that it ended the quarter with $1.53 billion in cash.

While some analysts said liquidity remains a concern, Sosnick, the Gilford Securities analyst, believes that Penney has the cash needed to get through an extended turnaround.

"The episode from hell is over, and Penney has deeper problems than ever before — but we believe it still retains the goodwill of its core shoppers and that they will return and shop more frequently as assortments of traditional lines are rebuilt," he said.

Penney shares rose nearly 6 percent, or 77 cents, to $13.99 in early afternoon trading. Before Tuesday, shares have been down nearly 70 percent in value since February 2012 when investors pushed up shares to $43 on optimism over Johnson’s plan.

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