J.C. Penney's turnaround doesn't appear to be in danger, but there are risks present that could cause its stock to fall.

Shares of J.C. Penney (NYSE:JCP) are down 25% over the past three months, with most of the decline coming in October after the retailer said momentum from the back-to-school season fizzled out as the third quarter progressed.

Many analysts feel the retailer's turnaround is imperiled, and though it made a lot of progress over the past two years, it's still in a very fragile state.

Third quarter financial results showed a surprise shortfall in revenues. While Wall Street acted shocked, it shouldn't have been as J.C. Penney had warned them of the weakness. Now that the all-important Christmas holiday season is upon us, it's crucial the department store carry through on its promises.

Here are the three main reasons investors could see J.C. Penney stock fall further.

1. Traffic doesn't return
J.C. Penney laid the failure of its third quarter to produce higher sales literally at the feet of its customers. It said store traffic continued to be negative, and though it continues to improve, it doesn't have enough strength to keep them coming back.

Last year the retailer got a huge tailwind behind its turnaround efforts by blowing out its clearance merchandise to clear the racks. Those big discounts attracted customers back into its stores, and kept them coming back for more.

That didn't happen this year. Clearance merchandise was down 30% from the year ago period and J.C. Penney had positioned itself to capitalize on the expected cooler fall weather. Although the low clearance levels helped it dramatically improve margins in the quarter (gross margins jumped 710 basis points to 36.6% year on year), when warm weather persisted customers stayed away.

J.C Penney has come out and stated that the Christmas season is off to a strong start, but if customer traffic peters out again, that could be a problem for J.C. Penney.

2. Retail remains weak
It's quite possible that the necessary traffic to turn the company around simply doesn't show up. Retailers everywhere continue to resort to steep discounting to lure in consumers, and without that bait they're finding it difficult to compete.

J.C. Penney's comparable store sales were comparatively better in the third quarter when compared to its rivals. Where it recorded flat same store sales for the period, Macy's (NYSE:M) and Kohl's (NYSE:KSS) saw them fall. That indicates that it may be gaining a little bit more share from its rivals, but pricing is also a component of how comps are computed. By not discounting as much, sales at stores open for a year or more report revenues that look stronger even though it's not seeing as many customers.

J.C. Penney's sales have recovered sharply, but are they poised to head down again? Data: J.C. Penney quarterly SEC filings

That seems evident in the units sold per transaction numbers it said were down from last year. Although conversions, average transaction size, and average unit retail were all higher than they were a year ago, customers are buying fewer items than they were then.

That's not a problem only with J.C. Penney, but is seen industrywide and indicates consumer sentiment remains soft.

3. It gets a lump of coal for Christmas
As noted, J.C. Penney said its holiday season was off to a strong start, but so was the back-to-school season -- and we know how that turned out. Now there are warning signs Christmas might not fare any better.

According to the National Retail Federation, this past weekend's officially unofficial start to the holiday shopping season might not be as intense as originally hoped.

Consumer surveys indicate that 55.1% of holiday shoppers did their shopping this weekend -- that's down from 58.7% in 2013. Average ticket was $380.95, down from $407.02. And where $177.67 of that was spent online last year, it was only $159.55 this year. Overall, total spending is expected to be just $50.9 billion this year, much less than the $57.4 billion spent last year.

A good part of the explanation is the deeper discounting retailers were doing. For example, Wal-Mart (NYSE:WMT) offered a 60-inch Vizio flat-screen TV for $688; this year a 65-inch Vizio smart TV was $648.

And retailers have been expanding when the Christmas season really begins, with many pushing the holiday out to Halloween even.

That certainly speaks to the declining influence Black Friday has on overall spending, but it may just mean consumers remain concerned and they don't spend that much this Christmas.

A turnaround still on track
J.C. Penney still looks like a troubled retailer heading in the right direction, but investors need to keep in mind larger trends that could derail its progress.

I've bet the department store chain continues on the road to health but these three factors could send J.C. Penney's stock lower still.

Follow Rich Duprey's coverage of all the retailing industry's most important news and developments. He owns shares of J.C. Penney Company. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.