Penney said its net loss had narrowed to $123 million, or 56 cents per share, in the third quarter ended Oct. 27 from $143 million, or 67 cents per share, a year earlier.

Excluding items, the retailer reported a loss of 93 cents per share, much wider than the 7 cents per share loss the Street was expecting.

Revenue dropped to $2.93 billion, compared to expectations of revenue of $3.27 billion.

Penney has eliminated most coupons and sales events and plans to transform about 700 of its 1,100 stores into a collection of 100 boutiques, such as Levi's Denim Bar, by 2015.

There have been signs that the first few shops, which also include Izod and Liz Claiborne, have won over customers, but they still only represent a small fraction of sales.

Penney customers, who are more price-sensitive than those at Macy's, have balked at the absence of coupons, and the sharp drop in visits by shoppers has decimated sales in the three quarters since the strategy was put in place in February.