Source:  Wikimedia Commons

As a Foolish investor, it's always a good idea to try and examine the opposing stance of your investment thesis with an open mind to see what you might be missing. Take J.C. Penney (NYSE:JCP), for example, a stock that I've criticized  plenty in the past. However, I believe the jury is still out. Even though I'm not comfortable enough yet to bet on it, there are certainly some encouraging signs that the struggling retailer just might make it.

Brief recap of the problems
Recall that back on May 16, J.C. Penney reported fiscal first-quarter results. Same-store sales popped 6.1% and were positive for the second sequential quarter. Many investors felt a huge sigh of relief, as a gain in same-store sales that large, especially during the tough industrywide quarter for retail, was a nice accomplishment.

However, the quarter still came with huge losses. A great deal of discounted, clearance inventory was sold. The unusually cold and bad weather, at least according to J.C. Penney back on its November conference call, actually helps the chain as it sells more warm clothes. Last but certainly not least, the "gains" in same-store sales were compared only to the year-ago quarter when the sales for that period got pulverized.

Source: Wikimedia Commons

Look at the parade
The first encouraging sign, at least for the long term, comes from competitor Macy's (NYSE:M). Macy's has been able to continue its winning streak year after year and is expecting 2014 to show another 2.5% to 3% in same-store sales gains. Macy's put its money where its mouth is by raising its dividend by 25%; it also increased its share-buyback program by $1.5 billion. Money speaks louder than words in terms of confidence.

During Macy's conference call, Peter Sachse, Macy's chief stores officer, pointed out the growing importance of digital integration shopping that is contributing to its success and outlook. The millennial generation is now the largest generation out there and isn't yet set in their spending ways. This market is still up for the taking before they develop more brand loyalty and before their spending power greatly increases when they're in their 30s and 40s. This is a potential opportunity for J.C. Penney to get market share as well.

J.C. Penney specific
During the conference call, Mike Ullman, CEO of J.C. Penney, stated,

We're in the third and final stage, which we call the go-forward phase, during which we're positioning J.C. Penney for long-term, profitable growth.

As evidence, he pointed out that within the quarter, J.C. Penney saw sequentially improving sales every month. In addition, online sales leaped 25.7%. That's pretty good from any level.

Old J.C. Penney Store from years ago. Source: Wikimedia Commons

Ed Record, J.C. Penney's CFO, added that the month of April saw positive foot traffic. It was the first time in 30 months that J.C. Penney saw a single month of improved foot traffic. That's big. It's one thing to sell more clearance-rack items to the patrons who are still left. It's a whole new ballgame to get new people in the doors.

Perhaps even more encouraging is, according to Ullman, that J.C. Penney is seeing a lot of the same customers return more often. This suggests they are happier with their experience. Part of the reason for that is J.C. Penney is going back to strategies from two-to-three years ago that were working well then but the company had ditched since. For example, Ullman stated,

"I'd say if you look at the category like fine jewelry, we've returned to promotional activity the customer really valued back in 2011 and before."

And what do you know, fine jewelry was one of the best-performing categories.  J.C. Penney didn't provide any specific breakdown here, but it makes you wonder what other areas the company can return to old promotional strategies that worked in years past. In 2011 for example J.C. Penney had an adjusted operating income of $536 million.  Perhaps part of the problem was the company went on to fix things that weren't broken.   

Foolish takeaway
J.C. Penney used to be immensely popular. There is no reason to say it's impossible for it to be so again and for it to rebuild its brand, especially among the younger generation. By adding back things the company knows have worked in the past when it was successful, and slowly but surely creating a growing loyal fan base again, maybe just maybe J.C. Penney can return to stardom. For now, I'll be watching from the sidelines like a hawk for signs, clues, and hints either way.