PLANO, Texas — JC Penney Inc. reported a smaller loss in the second quarter as the department store operator's sales improved, fuelled by such moves as bringing back appliances and refreshing other areas of the store.

Its shares rose more than 2 percent in premarket trading,

The news is encouraging, but Penney still faces an uphill climb as it continues to claw its way back after a catastrophic reinvention plan under former chief executive officer Ron Johnson sent sales and profits into a free fall in 2012 and 2013. Business has stabilised, though it has yet to fully recover.

Under Marvin Ellison, who has been chief executive officer since August 2015, Penney is looking for new ways to increase sales while playing catch up in e-commerce. One area that it is betting on is appliances. Penney is getting back in the business after more than 30 years. Penney is also expanding its Sephora beauty shops and is updating its beauty salons now branded Salon by InStyle

Still, like other department stores, JC Penney faces big challenges. Shoppers are shifting their money away from clothing toward experiences like beauty treatments and furnishing their home. And when they do buy clothing, they are increasingly going to off-price stores like TJ Maxx or online. In fact, Amazon.com is expected to surpass Macy's as the largest online clothing seller next year, according to some analysts.

After a tough start to the year, Macy's, Kohl's and Nordstrom all reported second quarter results Thursday that showed an improvement. But they are all trying to reinvent themselves from offering more exclusive merchandise to pushing online services. They're also pruning their fleet. Macy's, the nation's largest department store chain has been the most aggressive, announcing Thursday that it plans to shutter 100 stores by early next year.

Penney, based in Plano, Texas, reported a loss of $56 million, or 18 cents per share, in the quarter ended July 30. That compares with a loss of $117 million, or 38 cents per share a year ago.

Adjusted for certain items, the loss was five cents per share, which much smaller than the 14 cent loss estimated by FactSet.

Revenue increased 1.5 percent to $2.92 billion from $2.87 billion. That was slightly below the $2.93 billion estimate from FactSet.

Revenue at stores opened rose 2.2 percent, which matched the estimate from Wall Street analysts. In the first quarter, the company reported a 0.4 percent dip in in that measure, reversing five straight quarters of growth.

Its shares rose 24 cents, or 2.4 percent per share, to $10.18 in premarket trading Friday about an hour before the market open.

Penney shares have climbed 49 percent since the beginning of the year. The stock has climbed 19 percent in the last 12 months.

By Anne D'innocenzio.