It took nearly three years of aggressive inventory and cost cuts, but Coldwater Creek (CWTR) is finally seeing results.

The women's apparel retailer is expected to see better same-store sales in the second quarter, J.P. Morgan analyst Brian Tunick wrote in a note on Tuesday. In the first quarter the company posted a whopping 19% decrease in comparable sales.

Investors are keeping their fingers crossed and sent shares of the company soaring 13% to close at $6.10 on Tuesday.

Tunick also expects to see dramatic improvement in merchandise margins in the second half of the year.

Consumers are responding to some better merchandise and more wallet-friendly prices. Coldwater Creek has reduced prices about 20% to 35% on 35% of its merchandise.

Coldwater Creek is also on track to reduce expenses by $100 million by the end of the year and plans to open 10 new stores.

The company ended 2008 with $81 million in cash and no debt on its balance sheet.

Tunick says he believes that Coldwater Creek can operate more than 550 full-priced locations from 345 stores today.

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