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 14, 2013 5:00PM
JC Penney use to be one of my favorites stores.  I purchased clothes for my children when they were little at Penney,s.  I also liked what I found in the petites department.  Most of all, I loved JC Penney's linens and bedding.  Back in the fall, the Hanover, PA, store moved to a much larger building.  I was so excited and couldn't wait to visit.  What a disappointment!  It's a beautiful building with 2 floors.  Only the first floor is used for the public.  The upstairs is offices, storage and unused space.  Overall, the store had a cold feeling about it.  I walked through and found absolutely NOTHING in the petites dept that I was interested in purchasing. The quality of the clothing was cheap.  I traveled over to linens to look for sheets.  The selection was limited and what was available was not good quality.  I have absolutely NO plans to go back to any JC Penney in the future.  I've had a Penney's card since the 70's and it's now worthless to me.  I don't know who is responsible for all the changes, but they have royally screwed Penney's and I honestly believe Penney's is going down for the count.  As one of the previous entrys stated, they need a few women to revamp the store if they expect to save themselves.  We're the ones that do most of the shopping, and we're obviously not happy.
Jan 14, 2013 4:50PM

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.

Jan 14, 2013 4:50PM
Maybe they can convince the 1% that they should buy more, you know the likes of Degenerate and company.  There products used to be good quality, but now inferior.  Why pay good money for something that won't last.
Jan 14, 2013 4:49PM
lol hope you go broke jcp and all other liberal nut same sex love n dept stores
Jan 14, 2013 4:47PM
I used to work for JCP for about 3 years before they changed everything around with pricing and adding mini stores inside them. I have to say that I loved all the coupons that came out weekly and all of the sales they used to have. I shopped way more when they had all of that stuff and quickly stopped shopping when they went to block pricing. I also miss the 1.97, 0.97, 4.97, and 7.97 clearance they used to do at the end of a month, they had so many great deals and now it's even harder to find something appealing. =(
Jan 14, 2013 4:43PM
I guess everyone at Penney forgot that Martha Stewart is a convicted felon. That is the last person that I would have any featured products from in my store.
Jan 14, 2013 4:39PM

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.

Jan 14, 2013 4:39PM

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.


Jan 14, 2013 4:28PM
Mr. Johnson changed everything that was good about Penney's. And after he did that, sales sank. I say, "If it ain't broke, don't fix it". Bring back the coupons and the sales that got customers to go in the store to begin with.
Jan 14, 2013 4:28PM

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!  

Jan 14, 2013 4:27PM
Jan 14, 2013 4:23PM

It's Ron Johnson ya big oaf.  At least get the names right

Jan 14, 2013 4:16PM
In department stores I prefer all types of clothes displayed together, ie. dress pants together and t shirts together. I was in Penny's last week and couldn't find anything. I dont go to Penny's because i want a brand I go because I need black work pants.
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