JC Penney: turning on a dime Ahh, pennies from heaven. Shares in JC Penney rose 7 per cent, to $9, on Wednesday on signs that the troubled, mid-scale US retailer is finally managing to reconnect with its customers. Strategies such as limiting discounts (brought in by Ron Johnson, the former Apple executive ousted in April) had alienated Penney's shoppers. Sales plummeted. But now quarterly declines in same-store sales are narrowing and JC Penney is targeting same-store sales growth in the fourth quarter. That would be the first quarterly increase since the second quarter of 2011, before Mr Johnson took the helm. It is good news for investors smarting, most recently, from a dilutive $800m capital raising which gave the company breathing room to turn round. A few months ago shares were $13. There has been some help from the previous regime's poor performance. The declines last year were horrible and the fourth quarter of 2012 - when same store sales fell nearly 32 per cent - was the trough. Although the company forecasts an improvement in gross margin for the rest of the year, it is still making operating losses. Its gross margin is just 29 per cent versus 39 per cent and 37 per cent respectively at rivals Macy's and Kohl's. Discounting to clear out the merchandise purchased under the previous management has weighed on margins. They should improve if JC Penney is now selecting its stock well. But the retailer needs to keep attracting shoppers to boost sales and margins at a time when the retail business is getting even more competitive. Economic growth remains modest and times are tough for lower income consumers. The key holiday season in the US is expected to be particularly cut-throat. If the turnround falters, those pennies could quickly look like wooden nickels.