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J.C. Penney's Holiday Discounts Luring Shoppers: Pro

Big discounts helped lure holiday shoppers back to J.C. Penney, but it's too early to tell if the retailer is grabbing market share, Oppenheimer analyst Brian Nagel told CNBC on Monday.

"J.C. Penney is now reassuming a more price promotional strategy," the analyst said. "While this is a deviation from the initial strategy laid out by new CEO Ron Johnson, it is helping to drive better traffic to these stores and will position this company better as they reaccelerate their transformation plans in 2013."

After visiting two New York area stores, Nagel told CNBC's "Squawk on the Street" that there are signs traffic has picked up, but it's too early to tell if J.C. Penney took market share from competitors like Target, Wal-Mart Stores, and Kohl's.

Nagel is also confident that J.C. Penney has enough capital to transform its stores in 2013. "They will end the year with $850 million in cash this year and spend $850 million in capital to continue to remodel their stores next year," he said. Considering the cash cycle, that should leave them about $500 million on the balance sheet at the end of 2013.

"I am a big believer that ultimately this turnaround is going to work," Nagel said. "Ultimately, J.C. Penney will have a better look in their stores, a better brand, and they'll take some market share back."

By CNBC's Justin Menza

Additional Views: Buy J.C. Penney or Groupon?

Additional News: Forecasting 2013 Retail Trends

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