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 8:20PM
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Selling rags is a entirely different game than selling computers.
Jan 14, 2013 8:19PM
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I worked at Penneys for 18 years before all these changes took place and when they did i lost my job. Im glad to see that this new priceing plan is blowing up in their face because it cost alot of dedicated employees their jobs. You cant fix something that was never broke to begin with Penneys tried to say this new idea would make the company compete with the rest of the other retailers. If you have something at the same everyday low price there is no need for the customer to rush out to get it because its gonna be the same price aas where before when they had the coupons and sales people would rush out there to get it before the sale would end and they would feel like they got a good deal being able to use the coupons. Take that away and the customers now feel no need to rush for it because its always gonna be that price. Good luck Penney's this change is gonna cost you more in the long run then trying to save money by letting all of us hard working employees go.
Jan 14, 2013 8:19PM
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This is sad as J C Penny's was always a part of our family. I was in J C Penny's last week and drove a hour to get there as they closed the store near me three years ago. I had ordered a sweater on line and it was to be delivered to the store. I never heard anything from them to whether it was in or not so i went to the store. The catalog department had been closed and the sign said see the cashier, after waiting for fifteen minutes the cashier could not find any reference to my order in the computer under my name or phone number. Since i was there i shopped around and the quality was terrible, most of the merchandise looked like seconds. I wish them luck and i hope they change things back to the way they were and bring back the catalog .. forget about shopping on line. The baby boomers would support Penny's but most of us do not like change. Go back to the quality brands like Stafford, St John's Bay and stay with the quality you were known for.
Jan 14, 2013 8:18PM
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J.C. Penney was trying to appeal to the gay Fascists.Let it go down.
Jan 14, 2013 8:15PM
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I USED to shop at JC Pennys when they started the brand change I went elsewhere.  The changes SUCK big time.  took my grand daughter to Pennys for back to school shopping and she did not like the new brands.  If Pennys wants a chance they need to go back to brands that people like and know if not bye Pennys your new style Johnson is a bad style if I want to go to separate stores I will actually shop separate stores.
Jan 14, 2013 8:15PM
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Well, I used to shop at Penny's all the time.  Whoever came in and took something that was working and **cked it up. I don't like your new clothes and will NOT change my taste to shop there. 

 

Therefore, you lost me last year.  I don't even stop in the store anymore.

 

If you think making the store into little "shops," will bring people back, think again.

Jan 14, 2013 8:13PM
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Stock the stores with AMERICAN MADE.
Jan 14, 2013 8:11PM
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Im so disappointed.  I honestly did my share of spending there this year.  I do not see the new concept in my local store.  I have suggested many times in their surveys to do something bold.  Penney's is an old american catalog store, so I suggest that they fill their store with nothing but "American Made" and yes try the store within store concept.  But if I were the CEO I would seek out american companies and fill the stores with their products.  I would also go full on catalog too.  I prefer to shop online catalog.  I am disappointed with johnson at this point.  Overpaid and not listening.  I would rather the best store manager in the country and pay them 1 million or under.
Jan 14, 2013 8:08PM
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Not sure why all the negative comments. I worked at JCP for 5 years in mid early 2000s when it ran coupons seemly every other weekend.  Yes they were popular and makes you feel good knowing your getting a deal however it was harder back then to find clothes that didnt look bland.  Im 30 year old man so Im not trying to look like hipster but I Like a modern fitted shirt or a stylish shirt or long sleeve they have them at good prices compared to an Express,Macys,Norstrom.  Yes I can still get my Dockers work pants there for cheap and cheap pair of socks but they have added some respectable quality brands as well that doesnt look like im 80 year old grandpa would wear( no offense to 80 year olds I will be there some day.   I dont mind paying $5-10 or even $15 bucks more if it looks modern, fits right, has a little style to it,   I dont need a coupon to make me feel good about a purchase the clothes itself will  create that emotion.


Jan 14, 2013 8:07PM
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too much competition and JCP does nothing about it.  they haven't changed anything noticeable 
for me regardless of  pricing it looks like Ross and Marshalls 
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I love the "new" store and so do my 2 youngest daughters (21 and 23 years old)! The other day on CNBC one of the female talking heads were putting down the 'new" JCP and yet in the same BREATH she said she hadn't stepped inside a JC Penny department store in years! Of course the psychological effect of coupons and sales is always a good marketing ploy-that said-I think the new merchandise is fab and the prices are right on point! 
Jan 14, 2013 8:04PM
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They deserve it. I went to buy a female sweat shirt and all they had were scouped necklines. If i wear a sweat shirt i want a neck on it.They lost my business  I will pay a good price to have a decent one. Needless to say the quality was awful.
Jan 14, 2013 8:04PM
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hopefully they will go out of business, there stores are kind of poorly laid out, not to mention the products they carry really should just be considered an embarrasement
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They might have done a lot better had they had sales like in 2011 but they were slim pickings.
Jan 14, 2013 8:02PM
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Mistake #1 was going to the block pricing. When the customer base did not like the new pricing the store had a few choices. They could have back tracked, they could have switched gears and tried something new but instead they did the worst possible thing a retailer could do, they further added insult to injury when Ron Johnson claimed the consumer just didn't understand the pricing strategy. I know I love shopping at stores that insinuate that I am too stupid to understand how I spend my money. I have been shopping for a great many years but no longer at their joke of a store. If you want people to frequent your store I would first send him packing and make a public apology. However I think at this point it may be way to late.
Jan 14, 2013 8:02PM
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I was a loyal shopper at JC Penney for years, because the quality of the clothes was very  good.  Nice cloths that would last and had style.  I have to say now since you turned into Walmart I shop at Kohls.   Go back to what you had before, you can still add the newer trends for the younger crowd but don’t give up quality for price.  If I want cheap clothes  I’ll go to Walmart or Kmart.

Jan 14, 2013 7:59PM
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Penny's needs to get back to clothes and apparel for FAMILIES.  They lost their focus and their best customers with all of their current junk, that only weirdos would wear.  Anyone is a Penny's store lately wouldn't wear the junk they try and pass off as clothing.
Jan 14, 2013 7:58PM
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let ellen save them............................................
Jan 14, 2013 7:57PM
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Why did they take the discounts coupons away? As a matter a fact I was there over the weekend, Montclair, CA store I commented to the sales clerk that the store looks better than Macy's on the other end it did an I was telling the truth the store looks high end really nice!!  Anyways I ended up purchasing a blouse for 18 and a sweater which I thought was 35 but actually came out to be only 20 I was happy when I left!!!  Too bad JC Penny is going down hill I did have credit there but was shut down due to 3 late payments which wereny my fault?  I'm now caught up an paying them currently but my credit has been stopped Oh Well JCP you figure why I got penalized an I understand. I was a good paying crdit card customer before the 3 lates but what goes around comes around!!  Go Figure JCP???? 

Jan 14, 2013 7:54PM
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I've been a JCP customer for many years.  I really like the new store look and lower prices for quality products.  I don't miss the coupons that other stores have with all the restrictions.  I looked at Kohl's for polo shirts with a 50% discount and the price at JCP was better everyday.  I guess you can "save" at the competition or pay a lower price everyday at JCP.  The employees also are very helpful and care about you.  Keep it up JCP.
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