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.

By Jason Notte Jan 14, 2013 3:55PM
Credit: Mary Altaffer/AP Photo
Caption: Customers enter the JCPenney store in the Manhattan Mall in New York in July 2009J.C. Penney's (JCP) big turnaround plan took another hit thanks to some particularly Scrooge-like holiday sales.


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.


More on Money Now

376Comments
Jan 14, 2013 8:50PM
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More bad news for investors in Retailer's bubbles
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I hate to see old ships sink,they use to have a really good product St Johns Bay and coats ,etc,their underware were the best ,ts all pocket tees for men,and women and I found some really good deals in shoes etc. I love their Levis department ,set-up very spacious and easy to read, there is just too much out there and .com r killing alot of life ,jobs ,just tto much crap today!!!!!!!!!!!!!!!!!!!!!!!!!!!

 god bless us ,jc ,and the fallen world

Jan 14, 2013 8:48PM
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I was in our local JC Penneys over the weekend.  The store looked bare.   The brands that I was used to buying are no longer lines they are carrying.  The quality of the clothes looks no better than Walmart brands.  I don't see how JCP will make it through the new year.  The displays or should I say lack of displaying does not invite anyone to purchase anything in the store.  RIP!!!  Let Kohls rule!!!!

 

Jan 14, 2013 8:48PM
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I love the new JC Penney's.  I would never by clothing there in the past, now they actually have cute stuff!  I like the new stores.  Go JCP...turn it around.
Jan 14, 2013 8:47PM
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It's all China, Indonesia, or Taiwan, everywhere. More junk higher profit. That's all they care about. Wal-Mart sets the trend.
Jan 14, 2013 8:46PM
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The real reason for the downfall of these stores is that the articles like these written byJason Notte have no factual proof.  You cannot believe in an analysts whose job it is to analyzes fifty different companies and be accurate.  I will wait until the companies come out with their analasis and study it from there.  These people that know it all are paid big money to ruin or promote companies and either depreciate or increase there stock.  THE STOCK MARKET IS CROOKED, and so are most of the people that work for them.
Jan 14, 2013 8:45PM
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Please take it back to the way it use to be.
Jan 14, 2013 8:43PM
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I agree, management decisions have not been best for the company; I'm sure they'll adjust. But I'm surprised of the number of people commenting on the cheap quality and the unpleasant store atmosphere, then hyping up Walmart; wow. The several JCP's in my metro area are all nice; but, that's just 7 or 8 stores. If you want everyday items, groceries, car tires, and ok lower end items......go to Walmart or another big box store. If you want electronics, go to Best Buy. If you want to buy in gross, or hope to catch something interesting on the sales floor, go to Costco. If you want affordable decent clothing, shoes, home furnishings, and even jewelry, go to JCP, Sears, sometimes Kohls & Target. I use all stores mentioned; just depends what I need. One thing I learned from my parents, "Be thrifty, not cheap". Stores like JCP should should strive to appeal the average shopper that is not necessarily looking to be cheap; but value minded. They are not a Walmart or a big box store, and they don't need to be. For what they sell; they need to inform people they are getting a better product in a better shopping atmosphere.  Unfortunately, the American Consumer has become accustomed to the so-called convenience of one stop shopping. They'll stop by a Walmart or the like, to buy a few items, and then decide to "substitute buy" an item while at the big box; usually a step down on quality, but hey, one less drive, and I just saved 5 bucks on this shirt that "will do". 
Jan 14, 2013 8:41PM
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I used to love JCPennsy's.  But I stopped shopping there when they stopped having sales and when they got rid of my favorite brands.  I used to love their purses and clothes.  I LOVE my St. John's Bay pants and wear them all the time and they got rid of them.  I recently looked at the website since I need some jeans and everything I was interested in was out of stock!  FIRE this stupid CEO and bring back the JCPEnney's that I loved!
Jan 14, 2013 8:41PM
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I stopped shopping there when the coupons stopped coming.  Simple as that.
Jan 14, 2013 8:36PM
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Want to save JCPenney? Bring back the coupons. Period.

Jan 14, 2013 8:30PM
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Radio: "Ditch the coupons, because we've got the lowest price marked down at JcPenney"...As I was curious to know what the prices were at the already affordable department store, I was excited to check it out! I was hoping the prices were twice cheaper and the clearance items were 10 times cheaper!  Then I was so dissapointed! The store did not have clearance items anymore, after coupons were banned from the store - clothes were much more pricey, the store was already replacing their shelves with Levi's, Sephora, MNG by Mango, Betsy Johnson and other name brands that lower income family couldn't afford. What happened to what was "family savings" ....After my last visit to JcPenney, I have finally told myself that Macy's is the better deal in department store.
Jan 14, 2013 8:27PM
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no! but Obama and demos and bias media said the economy is growing! AND THEN HE RAISES MIDDLE CLASS TAX CUTS AND GIVES

RAISES TO CONGRESS AND EXTENDS UNEMPLOYMENT AND WELFARE FOODSTAMP BENEFITS AND GIVES ALL HIS BUDDIES

LIKE GE HOLLYWEIRD GREEN ENERGY BIG UNIONS ETC..ALL TAX BREAKS AND STIMULUS MONEY AND THEN GOES ON HIS

FING VACATION! ALL THE WHILE FUEL ENERGY AND FOOD PRICES ARE SOARING HE DOES NOTHING! OBAMA SUCKS!

Jan 14, 2013 8:25PM
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I stopped in before xmas and the store looked deserted, terrible sales, not much inventory in the store,  as in wide open spaces,  very poor variety.  They should study Boscovs.
Jan 14, 2013 8:25PM
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I really think that the changes made are not working out, now is a pain in the neck finding something in the store specially here in Plaza Las Americas in Pto Rico, where the store is so big that it now looks as if iit s closing, lots of empty spaces, not enough salespersons and very boring to shop on it

Jan 14, 2013 8:24PM
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JCP, it doesn't matter HOW much you try to change the product in your store...being a JCP Platinum Card Customer of your store for 40+ years...you do nothing to entice many of us to even WANTING to walk into your store anymore and see all that new stuff coming in.  Give us back your Specialty Sales Catalogs so we can see what you've got BEFORE we leave the house.  Gas just costs us way too much these days to waste an unnecessary trip to your store anymore.  And Oh yeah...dump the TV Ads while your at it...MOST of the women who actually shop there are NOT Size 1 Young Moms!!!  Try gearing your Ads to those who actually HAVE the money to spend there in the first place.   Crash and Burn Baby...there are other great stores to shop in.
Jan 14, 2013 8:24PM
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penny's signed its death notice by promoting lesbians most family oriented people vow not to shop there any more, j.c. penny was always known as a family store as sears, to have a lesbian spokes person sickens consumers, ignore the in your face and keep on dying, consumers need trust and j.c. penny betrayed it, I don't see a turn around they push filth and expect people to roll over but my dollars come hard and I am not spending them anywhere when I can get the same thing at a more upright store
Jan 14, 2013 8:23PM
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We are wasting our time, the execs at JCP do not listen to the customer.  I was a regular shopper and I am so disappointed about this awful change to the store.  Unfortunately, for JCP its too late to go back to the old store layout.  The execs do not want it to be said they were wrong about changing the store.  It will probably be blamed on the economy or something.
Jan 14, 2013 8:21PM
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I don't need or want JC Penney to be another Khols or Belks, it had a flavor all it's own. It offered well made, stylish, often trendy and competively priced merchandise, in styles and sizes that offered something for everyone. Most holidays, I did all my shopping at Penneys. As another poster said, they have the best selection of bedding, linens and towels of anyone. One mistake they made a few years ago was creating centralized cash registers. Instead of dept. registers. If you were shopping in bedding you had to carry an armload of items halfway through the store to find a register. ( it's not like they supply shopping carts). I am certainly less inclinded to purchase if I have to hunt down someone to hand over my money to.

As with ANY retail establishment. QUALITY merchandise and HELPFUL, curteous sales associates go a long way to keeping customers. Spend a little more time and money on training your staff and less on gimmicky advertising and see where that leads you.

Jan 14, 2013 8:21PM
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Maybe if JCP would update their website and actually have the merchandise in stock that they display people might shop there but it isn't uncommon to find 5-6 items that are on the website only in one or two sizes or completely unavailable.

 

Their quality isn't great either.

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