More bad news for JC Penney
There was nothing merry about the holidays for the retailer. Forecasters say sales may have dropped by as much as 30% despite tweaks to stores.
On Friday, UBS analyst Michael Binett downsized his forecast for Penney's fourth quarter and told Reuters he expects same-store sales to decline 28% after originally projecting a 20% drop. The New York Post piled on, saying that sources close to JCPenney told the paper that same-store sales were down more than 30% throughout the holiday season.
That's sent J.C. Penney shares plummeting nearly 8% in the last five days and continued the company's nearly 58% slide since February 2012. That was just after the company announced across-the-board price cuts and its intent to divide its nearly 700 large stores into a series of mini shops for brands like Martha Stewart, Izod, Liz Claiborne and others.
Unfortunately for J.C. Penney and chief executive Ron Johnson, a former Apple (AAPL) and Target (TGT) exec, consumers don't seem to think much of the company's strategy. Same-store sales were down 26% in the third quarter and Johnson abandoned his own limited-discounting policy for Black Friday deals and a recent spate of 20% to 50% price cuts aimed at reducing inventory.
Even Johnson realizes that changing customer tastes will require J.C. Penney to sell more products by designers like Betsey Johnson, Nanette Lepore and Marchesa, but racks full of everyone's great aunt's favorite brass-buttoned outfits have to be cleared first. That leaves the store stuck in a retail limbo where it's trying to transition from one customer base to another, but doing little to please either in the interim.
This puts J.C. Penney dangerously close to Sears (SHLD) territory. That foundering retail chain and its Kmart holding have resorted to selling off real estate within their large stores to gyms and grocery stores just to make a few extra bucks. Successive reports of falling sales and revenue at Sears and continued selloffs of both stores and intellectual property like Craftsman tools make Sears look like a company in liquidation. Even its remaining stores haven't been spruced up in a number of years.
The difference at J.C. Penney is that it at least appears that Johnson and company are trying to save the retailer. The chain is pressing on with its mini-stores idea even as it abandons its anti-discounting stance and Johnson and others continue to invest cash and energy into the brand. With sales dropping by more than a quarter with each earnings report, however, all that effort may amount to going down swinging instead of going down looking.
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Sadly, this "turnaround" has been faltering since last Feb. when their new pricing strategy took effect.
J.C. Penney was not really known for it's trend-setting fashions but more for appealing to everyday, sensible styles that people can actually wear! I have been a cardholder for a long time but have resorted to shopping online from their website and have avoided their stores altogether. They have been so streamlined, there is nothing in them anymore. It really is sad to see. Put a woman in charge, and you might see a real turnaround, if it's not too late already!
The changes at JCP are out of hand. Why can't the leadership accept that JCP is not Macys, Dillards, Nordstrom, etc. JCP was always known as a place where middle income working people could go to get quality clothing, shoes, etc at reasonable prices. We weren't interested necessarily in trends or "in" brands, just quality apparel. It's like JCP is ashamed of who they used to be, when in all honesty, it should be a little concerned about what it is trying to become. I'm tired of going to JCP and looking around and saying "oh no, they've changed it again!"
Older customers believe in the coupons, if they think they are getting something cheaper than normal then they will buy it. alot of people know what the price of a particular item normally sells for and if it's alot higher with the FAIR AND SQUARE PRICING is now, they won't buy. Penney's has cut many jobs and I feel the people there now do the best job they can with the resources they are given. Changing to and catering to the young has never gotten stores anywhere. Remember Mervyn's? You used to be able to find a nice suit at one time, then they started to cater to the teenagers, lost the babyboomers and finally went out of business.
Penney's still has nicely priced suits and clothes for the professional woman, but I still say to bring back the coupons.
After shopping there for over 50 years I honestly do not know one friend that still goes there. When all you hear about is their disastrous marketing plan, confusing pricing, poor quality goods, and their love of gay marriage who can be surprised at their self destruction. With their progressing losses I give them maybe 8 months before they run out of cash. Everyone in business should learn from this.
It's time to pull out that "interview suit"!!!!!
I thought being known as the gay store would have made them millions. I guess just 6% of the population can"t keep Penneys upright.
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