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

Jan 15, 2013 9:21AM
Hey JCP! hire me! I'm a heel of a lot cheaper and will do a better job
Jan 15, 2013 9:18AM

JC Penny never should have changed. It's been about a year now and business keeps dropping. Get rid of those a-hole C.E.O.'s and don't give them no bonus or buy-out for leaving.


You don't go from running adds and giving coupons to "we just have everyday value prices"! Shoppers have a mind set and after all these years, you just don't turn that off and get people to shop the way you want them too.


My local JCP is half empty. They have spaced out the inventory to make the store look full. There is only like 3-4 cashier stations, when there use to be about 10.


Funny thing is, JCP has spent thousands on hand held electronic devices as lonf as you use a credit card. So now you have the cash register and this probably $2,000 hand held device.


There is time to save to the company. Just look back 1 1/2 to 2 years ago. Look at your competition. Macy's and Kohl's still run adds and give coupons.


I use to spend over $2,000 a year easy at JCP. Now, it's like $50


You don't need a crooked shelfish CEO to make decisions because he a piece of paper hanging on the wall. Look at what works and does works and listen to your customers.


Sears and JCP are probably the oldest retailers in our country and now cheap crooked CEO's have cut corners and quality of products to fill their already deep pockets and are putting them out of business.

Jan 15, 2013 9:12AM
Face it Ron Johnson. You just don't listen to what the people want!
Jan 15, 2013 8:56AM
I had not shopped at a Pennys in years, mainly due to on line shopping, but this Christmas I ventured into the new store in the Hanover, PA mall and thuroughly enjoyed the store.  I thought it was set up well, was crisp and more modern than in the past, and they actaully carried selecetions in my size.  I did spend a decent amount of money there, returned later to do it again and told all my friends and family of my experience.  I enjoyed the changes.  Glad to have them in the mall.
Jan 15, 2013 8:38AM
I worked as a manager in one of JCP's 13 distribution centers for ten years.  Things were fine until two seats on the board were given to a major investor and Ron Johnson was brought on board.  These moves promptly caused the closure of 4 distribution centers and the loss of thousands of jobs throughout the company.  I would like to feel sorry for the future of the company but just can't find it in me.  Karma is knocking on the door of corporate greed and mismanagement.  What goes around, JCP, comes around....... 
Jan 15, 2013 8:07AM
Having a gay represent them doesn't change my view on JCP. I went there for the sales, quality, and selection. These are all gone. Cut services and junk on the shelf will be the death of JCP. I can't beleive the thinking behind the management at JCP. Good bye old freind.
Jan 15, 2013 7:59AM
I have had a JCP card since the 60's! The new changes are horrible. I went to my favorite JCP to buy some clothing and what they had in the store was hideous. Had to special order my slacks because they were not in stock in my size! This has never happened there before. There seems to be about a 15% price increase across the board and no organization of the clothing on the racks. They took out most of the check-out stations and the cashiers were backed up with long lines. Not because of so many customers, but because of a lack of check-out stations!. They have cut on line services also, such as hemming pants. Raise the price 15% and then expect me to take them to a taylor for hemming doesn't save me anything! JCP, time to get your head back in the game. Why would I ver go back, or order on line again??
Jan 15, 2013 2:42AM
Sign of the times.......The End Of Comfort Shopping. It's all essentials now.
Jan 15, 2013 1:46AM
If they change back to the way the store use to be there will be an increase in sales. The way it is now I know many people who have stopped going there.  The clothing racks look like shopping in a thrift store and that's the type of people who are drawn to it.  Bring it back the way it was with more merchandise, coupons, to its customers and it will thrive.  By the way get rid of the person responsible for the decline in sales for the store.
Jan 15, 2013 12:12AM
My mother, aunts, and all their friends used to be JCP shoppers. I've had a lot of gifts from there through the years because those ladies would get coupons and HAD to use them before they expired. None of them shop there with regularity anymore.
Jan 14, 2013 11:58PM
It sure looks like JC Penny can't keep up with Targets marketing.
Jan 14, 2013 11:02PM
Sounds more like they have been boycotted by a large percentage of their traditional customer base.  I have not shopped there since they started their new "strategic plan" and headed down their own politically correct path.
Jan 14, 2013 11:02PM
I have never been in a JC Penney store.   They built a big one a few miles from me, but Dillards is next to it and that is where I shop.   I'm gonna check it out though since they are slashing prices.
Jan 14, 2013 10:33PM
The real reason Johnson doesn't bring the coupons back is he knows it really isn't going to help. The main problem is the homo crap that was forced down people's throat, the 2nd guy in command that Johnson hired for marketing pulled that stunt and he is the only one fired...too late because the damage was done. He doesn't bring back the coupons because it won't bring back most customers and that will be a huge flag that it really was the homo crap...can't have that!
Jan 14, 2013 10:32PM
Don't worry. When that young bush gets in office, he'll give them a bail out like his old uncle did with GM and Chrysler.  Ford was smart enough to turn him down.  I guess the old man bush is gone home now after seven weeks of round the clock petting in the Houston hospital.  Damn!  I didn't get to get my coke and peanuts.
Jan 14, 2013 10:06PM
I use to shop there alot, don't anymore.......... i saw this coming, as did many others.
Jan 14, 2013 9:36PM
If JC Penney would return to tradition, choose and sell quality merchandise MADE IN THE USA, the entire country would beat a pathway to their door.
Jan 14, 2013 9:21PM
Yep JC Penney was my favorite store to shop.  I am only 41 and had been shopping there for years.  They had great deals and great merchandise. Now the merchandise seems sparse and cheaply made.  Also I never see any of these great everyday prices.  The pricing seems to be what it always was, but now the merchandise is flimsier and there are no occasional sales to help you be able to afford to shop.  They did the pin contest for the holidays and I thought wow, that's cool until I got home with my 4 pins to enter and they had all already been entered.  I emailed JC Penney about the fact that it was a great idea but they may want to keep an eye on their young employees with phones that have internet access since it appears they were entering the codes themselves.  The response I got was you can go back to the store and ask for new buttons.  It's the holidays, I drove 20 minutes to go to your store shop and get the buttons on my only day to shop and you think somehow I magically have more time to drive 20 minutes back to ask for new pins because the pins I received at checkout were already entered.  As if the others weren't going to be too?  It was not a good response back to a customer that was bringing a problem they were having to light.  Sad to say it used to be the only store I could ever find work pants.  But I have pretty much struck out on finding anything everytime I go with the gift cards my mom gets me every year.  Next year I guess I will tell her to spend her money elsewhere since there is never anything in the stores to purchase.  The demographics of that store was not tennie boppers it was adults and it appears they thought the way to go was to cater to the young crowd.  Well the young crowd doesn't have money and they shop at old navy and you have entirely alienated the shoppers you used to have.  Bravo....that CEO deserves a big bonus!
Jan 14, 2013 9:19PM

I also add my voice in disappointment with the new JC Penney store.  I wrote a letter to our local store after seeing the interview and promotion of the new approach.  I was sickened that they made a big, smugly offensive deal of choosing Ellen as their new spokesperson, etc.--------in that she embodies what they stand for now.  I stated  I couldn't shop there anymore, and haven't.  It saddens me, and I do miss it, as Penney's was always my shopping choice.   Living in Mo.,  I've been to JC Penney's home museum in Hamilton.  It is such a treasure and tribute to America's ways.  I wish the CEO would have looked to him as their new spokesperson.  It could also have helped educate us all.  

Jan 14, 2013 9:05PM
I would hate to see Pennys go under.  Love Worthington and Liz Claiborne!
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