J.C. Penney Shares Bounce on New Discounts

When former Apple AAPL COO Ron Johnson took over as CEO at J.C. Penney JCP, the struggling U.S. retailer, he laid out a five-year plan to turn the retailer around. However, years into the plan, shareholders have seen little in the way of returns from this plan.

One key tenet of the plan was erase discounts from the stores and to sell products at full retail as much as possible, in order to maximize margins. However, this strategy has failed so far and the company is now set to reverse on its position and begin discounting once again.

CEO Johnson announced in an interview with the Associated Press that the company will now restart targeted discounts during certain times of the year, most likely during key holiday shopping seasons. Johnson said the change in policy is aimed at luring shoppers back to stores who were turned away by the abrupt change of company policy.

"Our sales have gone backward a little more than we expected, but that doesn't change the vision or the strategy. We made changes and we learned an incredible amount. That is what's informing our tactics as we go forward." Johnson was quoted as saying.

Noted activist investor Bill Ackman, who owns 39 million shares of J.C. Penney, has been a supporter of Johnson's since he was named CEO. His position represents approximately 18 percent of the floating shares of J.C. Penney or 10.6 percent of his firm's portfolio.

Reports also show that J.C. Penney may tweak its broad strategy by laying off some employees and closing losing stores. By decreasing headcount and the number of stores, the company should be able to focus on key assets and trim the proverbial fat from the company, albeit by taking losses in the near term.

J.C. Penney shares rose 5.83 percent in early trading in New York to $20.33 per share. The stock is well below its 52-week high of $43.18 and above its 52-week low of $15.69.