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J.C. Penney's 'Turnaround'

This article has been updated from 7:42 am ET with new information.

NEW YORK ( TheStreet) - J.C. Penney's (JCP - Get Report) dismal second-quarter results don't suggest the company is on the mend. However, is the department store chain really doomed?

Retail and turnaround experts make the case for J.C. Penney's comeback.

"The company still has brand equity among its core consumer,"says Michael Appel, president of Appel Associates, a turnaround and performance improvement consulting firm. "The big issue is going to be whether they the amount of capital necessary to buy the time to fix the business. And that's always the issue with these businesses."

Appel believes that although J.C. Penney has tough competition, there's nothing to suggest the company can't right itself. "In the moderate price point there's so much competition," Appel said. "That doesn't mean with the right management and the right strategy and positioning and right product they can't do it."

Also see: J.C. Penney Reports Wider-Than-Expected Loss

J.C. Penney reported a worse-than-expected net loss of $586 million, or $2.66 a share, chock full of extraordinary charges pulling the number down. Net sales slumped 12% year-over-year, and gross margin fell to 29.6% in the quarter. The company plans to end the year with $1.5 billion of cash.

CEO Myron 'Mike' Ullman noted on the company's earnings call that the reversal of initiatives by its former chief executive Ron Johnson will take time - and money. Essentially reversing initiatives to reinstate things like sales and promotions instead of the everyday pricing, clearly identifiable staff and checkout stations as well as a newly launched home section that already was not resonating well with customers and needs modification all requires investment.

J.C. Penney on Thursday said that it adopted a stockholder rights plan in hopes to make it more difficult for anyone to acquire or own more than 10% of the company. The plan, which has a term of one year, is designed to "protect against any potential future use of coercive or abusive takeover techniques and to help ensure that the company's stockholders are not deprived of the opportunity to realize the full and fair value of their investment."

Along with the plan, the company's board of directors declared a dividend of one right for each share of the company's common stock held by shareholders as of the close of business on September 3, 2013. The rights will be exercisable only if a person or group becomes an "acquiring person" by purchasing or owning 10% or more of the common stock.

Despite the bleakness, within the numbers there was improvement, suggesting early signs that the ship is being righted. Comparable store sales improved by 470 basis points from the prior quarter. Sales improved each month in the second-quarter, and the company was seeing encouraging momentum in its stores from back-to-school related purchases.

On the e-commerce front, sales also sequentially improved with July sales jumped 14% over last year, the company said. Selling general and administrative expenses fell slightly over 2% year-over-year to $1.02 billion.

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