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.


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376Comments
Jan 15, 2013 2:21PM
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Ron Johnson is an idiot.  Worse, the board needs to be lined up at the shareholders meeting and summarily fired as well.  There is no defense for the decisions Johnson has made, and unfortunately the reporter here has no clue about retail or JCPeney as well.

 

Ron Johnson is a narrow minded retailer, one who has a single viewpoint and applies the world to his view.  Truly successful retailers understand their customer, understand their store, and develop startegies to profit inside the market.

 

Mr. Johnson's complete abandonment of the fabfic and window covering categories, which delivered significant profitability along with a commanding market share dominance, because he sees it as unhip, shows his ineptitude as a merchant and retailer.  His job is not to make his brand fashionable; his role is to deliver shareholders return on investment.  Such indifference to the owners is abominable. 

 

The board needs to demanfd his resignation, then resign on their own as well.  A calamity, a self inflicted wound. 

Jan 15, 2013 2:20PM
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Sadly, I cannot think of a single thing that JCPenny might have that I can't get elsewhere for less, with more variety and better quality. Too bad. When I was a kid, the store was more like a real department store and fun to shop. Not so, anymore.
Jan 15, 2013 2:09PM
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J.C. Penney stores are bland and are as thrilling as watching paint dry, back in the day they sold everything, furniture, electronics and other items....Just like Kmart they haven't kept up with the times, when I think of J.C. Penney I think of my grandmother......Kmart on the other hand could be a retail player once again if they upped customer service and updated the stores, it's like a time warp back to the 70's.......both of them better figure it out soon otherwise I see them going the way of Montgomery Wards....

Jan 15, 2013 2:07PM
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I have always love JCPenneys-It was and still is a great retail store-Please people give it some time to work with the new strategies in place by these new CEO. Remember JCP has been with us for more then a century and employ lots of people that needs their job, lets be more positive

about this great company. It is easy to complain about things - how about more sugestions on how to improve what is already there in place- Lets all hope to a better 2013. 

Jan 15, 2013 1:58PM
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Retail is over!! Its called a changing of age! You know we have a industrial age that started nearly 100 years ago spawning 2 huge world war's and its coming to a end cause of something called the digital age. Guns will be banned soon instead of simply using digital tech we have common now to signal law enforcement a moment you disarm a lock on your firearm thats a reality now science fiction. We can signal the police if someone breaks into your house or car but not when you unlock a gun? LOL I call bullcrap.

 

 

Jan 15, 2013 1:48PM
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JCP moved our store in Bangor Maine around so bad we couldn't find anything we were looking for why do this just before the biggest sales time of year
 It was so bad we couldn't even find the shoe Dept.
Moron move by JCP I would be it counts for a lot of loss if they did it to more stores like that

Jan 15, 2013 1:40PM
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Look, I am an older lady that doesnt like to look like

I just fell into a flower garden!! I know they buy everything

from over seas but the quality is poor and colors are

worse. Give me back respectable clothes,coupons and

a salesperson that can tell me where they hid them.

Give the purchasing decisions back to each store

manager, they know what the local customer wants.

Jan 15, 2013 1:38PM
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My family and I were big JC Penney shoppers, but when the mother's day ad in 2012 came

out with a lesbian couple it was the last time I have shopped at JC Penney.  It goes against everything I

believe about a family and marriage  and what it constitutes. 

 

 

Jan 15, 2013 1:29PM
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This whole J.C. Penny fiasco is almost like a conspiracy by upper management to methodically steal all the value out of this old respected retail chain. This new CEO has raped the firm out of nearly a hundred million ( 60 million the first two months) in compensation while his incompetent performance invents one disastrous turn around scheme after another. Meanwhile the rest of the firm sits idly by and does nothing to stop the self destruction. To top it off Johnson has managed to take J.C Pennys to #1, the #1 most hated company in America that is (per a wallstreet 24/7 website survey). This guy should have been fired long ago.
Jan 15, 2013 1:25PM
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My wife and I used to shop for all of our clothes at J.C. Penney's before their gay campaign.  It sure would be nice if the left leaners would leave our stores alone.  Imagine a conservative running the Gap.  The government sponsored media would be all up in arms and showing the gay protesters all day long.  By the way, Kohls is a good alternative store for those looking for something similar to J.C. Penney's.  And as a lot of people mentioned the coupons were nice and I too liked their brands and the non trendy clothes before the conversion.
Jan 15, 2013 1:21PM
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JCP was and is just a name people. You all were shopping there because you thought it set u apart from the "poor" consumers. My mother always shopped at JCP but I hated their styles and their clothing was ugly plain damn ugly. It was rare that I found something that looked like I would want to wear. If JCP wants to compete with fashion, and do not forget people, that is exactly what stores like JCP are, fashion places for designers to showcase their line; JCP must allow fashion to run rampart in its stores or it will continue to fail. Those of you that are pissy of the "change" are pissy because that will mean all type of consumers will walk through that door and it will no longer be a "middle class" store. End of Story!

Jan 15, 2013 1:17PM
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The only problem I have is our store at Warsaw, IN  is not big enough.  I like not having to mess with the coupons and the prices are where they should be.  As for not having desingers items  what is Liz Calborne??  I have no problem finding the items I want only that our store is small so we do not have the wide varity.  I am 70 yrs old and still like fashion.  I may add I like women and men that tell me they like the way I dress.  I say JCPenney's   Don't have to pay big money and BRAND names to keep in style.  MONEY is and should be the big mind thinking.   GO JCPENNY.

Jan 15, 2013 1:14PM
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The new pricing strategy and the alignment with the homosexual agenda keeps me from shopping there.  I am not saying others can't shop there but I will not be supportive of their agenda.
Jan 15, 2013 1:13PM
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I still love to shop at J C Penney!  My kind of store!

 

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I have shopped at J. C. Penney's my whole adult life (I'm 75) and yes I am computer literate. However there is nothing for me to buy anymore.

Even my grandchildren don't care for the styles you now present to us.

I am not Haute nor will I ever be just a simple middle class person who is looking for simple styles that will last me more than one year if I live that long.

Jan 15, 2013 1:08PM
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It seems that Mr. Johnson has his own version of success.  What made JC Pennys a household staple was its reliability of product.  It had reasonably priced merchandise that was a good quality.  I agree with other poster..if it ain't broke, don't fix it.  I have been a customer for many years but haven't really found anything worth buying there in the last several months.  I particularly don't appreciate the "magazine" like ads that come in the mail.  They are immediately round-filed..nothing of worth in them.  I enjoyed the coupons and the feeling that you were really getting a bargain (whether or not you were).  JC Penneys will never be a Neiman-Marcus or anything like it.  When I go to the mall, this store is nearly always empty.  Its too bad but seems like Penneys will be only a memory soon (kind of like Montgomery Wards, if you remember who they were). 

Jan 15, 2013 1:06PM
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The Changes that are made to this store sucks...U can't find name brands like you use too. (example: southpole) and everything is made for skinny people and clothes are made too too thin...Go back to what was working.....

 

Jan 15, 2013 12:56PM
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They need to fire the new guy, bring in a bunch of employees who worked their 20 -30 years as consultants and buyers, managers, and get the store back to what it was.  When my husband was there the stocks split so many times, it was rare that the stock dipped.  Fabric quality was 10 times better, and much of the garbage on the women's side could sell in a dollar store for 50 cents.  Get back quality, durability and traditional style.  Get rid of all the vinyl eee width female shoes and go with something that doesn't look like it was bought as an excuse to have a department but you really want to close it.  Fire all the women's buyers and shoe buyers.  Get people who know what they're doing.  It isn't JCPenney that is the problem.  It is the 'new clueless blood' that has taken over the store buying, management and counters.  The Name, the Brands, The Old Ways of Marketing and Selling kept the store going for years.  Give up the top people, and replace them with tried and true employees and let the company gain back its customer base.
Jan 15, 2013 12:46PM
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the new pricing schemes at Penney's stink!!!!  I'm so disappointed in a company that I used to love to shop at.  Customer opinion and preference don't mean squat to Mr. Johnson.  I see no good anymore at Penneys, I see it going down the tubes fast and I agree, if it isn't broke, DON'T FIX IT!!!  I want the coupons and better deals back than overall one pricing pattern....
Jan 15, 2013 12:42PM
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I use to LOVE going to Penney's. And looked forward to the coupons and sale ads in the paper.  For 6 yrs I have purchased 99% of my granddaughter's school clothes there.  NOT ANYMORE!  The clothes for 9 yr olds look like they could be street walkers!  All, flimsy, and revealing.  PLEASE bring back the normal clothes (t-shirts, blouses, jeans) that kids can wear everyday, and will hold up over time!  And the selection is NOTHING!  I can walk through the children's section in less than 3 minutes and see nothing that I would want to purchase because there is hardly anything there.  I absolutely HATE the "new" Penney's in Charleston, WV.  Please, please bring back the selection, quality and ease of finding what you came into the store to purchase in the first place!  Right now, Penney's is my last resort when looking for clothes for myself or my granddaughter.
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