By Alyssa Oursler

In August, J.C. Penney (JCP) offered free haircuts to kids. About 1.6 million haircuts later, the company has decided to make it a permanent offering.

After all, the program indeed seemed to attract customers -- and that hasn't been the store's strong suit lately, to say the least.

JCP's first-quarter earnings report was the worst in nearly 40 years, and it didn't fare much better in the second quarter as same-store sales continued to sink. It also suspended its dividend and withdrew guidance for the year.

New CEO Ron Johnson's first order of business when taking over had been to stop holding sales by introducing everyday lower prices. But he soon found the move was getting rid of customers as well.

Since then, the retailer has been doing anything possible to stop the bleeding. The free-haircut program, which will start again in November and run every Sunday, is just the most recent move.

J.C. Penney also announced price cuts this summer -- after re-introducing the word "sale" into its vocabulary -- and introduced in-store shops featuring brand names like Levi's, Izod and Martha Stewart (MSO).

And if the company's shares are any indication, the moves seem to be working, at least to an extent. JCP has gained nearly 30% in the past month, slowing year-to-date losses to less than 20%.

The company still has a long way to go in its attempt at a turnaround, though, and it faces tough retail competition from all over. Sears (SHLD), Macy's (M), TJX's (TJX) T.J. Maxx and Marshalls stores, Ross Stores (ROST), Target (TGT) and even Wal-Mart (WMT) are battling for the same penny-pinching customers.

Plus, its latest rally may just be a result of short sellers taking their profits. And if that's the case, J.C. Penney may need more than a few free haircuts to turn things around.

As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.

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