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

375Comments
Jan 14, 2013 6:08PM
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I for one miss the old catalogs, I kept them until the new one would come out, now I get them and throw them right in the garbage.  

Jan 14, 2013 6:08PM
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My wife and I grew up in large conservative families and have raised our own conservative family (30 years 8 kids). Every school year, Christmas,Spring shopping, We  would shop at Penney's because of sale prices, and,and coupons which made our dollars go much father for quality clothes and suits.  Tens of thousands  of dollars we have spent with this company.

 

Then Penney's turned it into a Target store!. You changed your overall image to left leaning values other  than  keeping a neutral stance.. You forgot the faces of your customer base, you failed to look at what made your store important,to your customers. You shot yourself in the foot and your numbers reflect that that cold reality.  I have yet to return to your store or your outlet since you started on this path.

Jan 14, 2013 6:07PM
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Why is anyone surprised?  People are not spending because our government is not giving any of us  confidence at all for a prosperous future.  OUR GOVT. IS SOOO SCREWING THINGS UP!  Businesses are sitting on their money because they have no idea what is coming down the pike.  People who are near retirement aren't spending because they are afraid of what's coming.  None of us know what Obama care will cost.  This is the WORST recovery in our history and we still voted in a man to be our president who does nothing to inspire our economy at all.  He does just the opposite ......welcome to our new economy. Get used to it.
Jan 14, 2013 6:05PM
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The head of the company ignored human nature and long established customer buying habits when the strategy changed.  Shoppers like cupons and the perception of getting a deal and buying something on sale.  Even if a price is already at its lowest point, people will still think they're getting a better deal when they buy at an inflated price that is lowered with a sale or coupon.

 

I used to shop for a few basic things @ JCP, this year I found my local store practically empty.  At the end of Fall/early Winter, I usually buy a few sweaters as in the past they have had a large selection and array of colors.  This year, almost no sweaters.  So, I went to Macys where I got them on sale with a coupon too.  I probably paid more still, but at least they had them.

Jan 14, 2013 6:05PM
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My wife and I shop almost only at Penny's because we like their clothes and their return policy. I've had a pair a jeans that ripped 6 months after I got them and had no receipt and they replaced the jeans no questions asked. I love that store, and that is why we shop there.
Jan 14, 2013 6:04PM
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They will all be gone in time, walmart is your destiny america. They own you, they enslave you, and they are making sure no one else can afford to be in business. 
Jan 14, 2013 6:02PM
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I love J. C. Penney.  However, I sure hope J. C. reps are reading this.  At Christmas, there were only two places to check out your merchandise.  One at the mall entrance and one at the back of the store.  Everytime we tried to go shopping there, the lines were clear across the store in length to check out.  There were two people checking at each of the two stations.  I figured they must not want to sell anything, plus the air conditioning was broken for weeks.  Everytime I tried to shop, it was about 100 degrees.  This is at the Central Mall location in Port Arthur, Texas.  It will definitely go under.  No one cares that you are even in their store!!  The clothes fit great, so now I just shop on-line.  I really have never seen such poor customer service as I did at Christmas at J. C. Penney.
Jan 14, 2013 5:57PM
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Oh...I forgot, you need to replace your buyer.  Your new "Big & Tall" department sucks!
Jan 14, 2013 5:57PM
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I gave up on Penney's years ago.  They were getting too hoity toity even then.  We shopped there my entire life - gifts for baby showers, wedding gifts, newborn gifts, graduation gifts, and our own wardrobes.  It was a great place to buy linens for everyday use.  Then they got into that designer craze and suddenly we regular people weren't good enough for them as customers.
Jan 14, 2013 5:57PM
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Has the new guy figured it out yet????  I used to LOVE shopping at Penny's - I could always find what I wanted and usually on sale (remember those little pink sale stickers?)!  Now, it's just a tee-total, hot mess!!  I don't even like to shop online anymore - the website is very, very slow and everything I see that I'm interested in is sold out!  Ya know, if you can program the computer to say an item is completely sold out, you can program it to just take the item off the site altogether!!  I don't want to shop and see something I like, only to find out it's completely (not just in one size - COMPLETELY!) sold out!!!  It's no wonder sales have toppled!  Bring back the old Penny's (AND the pink sale stickers)!!
Jan 14, 2013 5:55PM
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This is a simple fix....BRING BACK THE COUPONS!!!!  I can buy clothes cheaper at Macys because of their sales & coupons.  I don't shop at JCP anymore :(
Jan 14, 2013 5:54PM
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JCP is for the 99%... you know, poor people. 
Jan 14, 2013 5:54PM
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I havent seen much of a price differences since they have changed.  They still need to have sales!!!

 

Jan 14, 2013 5:53PM
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Penny's needs to go back to what JC Penny had. A store for everyone. A store for the working people.I bet J C Penny  is rolling over in his grave, to see what has happened to his store. Change is not always good. What was good for Apple, is not necessarily good for a clothing store, and Penny's has always been a clothing store for the working class. Kids, parents, grandparents, retired, teens, and all inbetween. Apple is electronics, Penny's is clothing. A smart executive knows the difference.
Jan 14, 2013 5:53PM
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Listen Corporate!!  Bring back the old JCP store.  During Christmas  and now, you look like a cheap discount store going out of business.  Bring in your new ideas of Martha Stewart and other things, but bring back the Old JCP store please.  I was one of the reasons your sales are down.  We purchased nothing from you all during the holidays.  We carried our business elsewhere. 
Jan 14, 2013 5:52PM
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Get rid of the homosexual affiliation and maybe the store can survive.  Like millions more, I haven't spent a dime there since they made homos their driving point. 
Jan 14, 2013 5:52PM
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I used to shop JCP a lot. The last few times I have been in there I came out with nothing.  The style of clothes are trashy looking.  The jeans are made in the style for the kind for them to to be wore below the butt.   The quality of the clothes has gone down.  Sure hated to see this happen.  But to me JCP has gone to the dogs
Jan 14, 2013 5:52PM
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I agree with most...the "new" layout of the stores is not a good move...I do not like it and have not found anything to purchase since the new design. Going forward is not always good and in this case a bad move
Jan 14, 2013 5:52PM
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Family went to JC Penney black friday side show, it was like walmart. Cut the card they lost my business
Jan 14, 2013 5:51PM
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The only thing I still buy at JCP is my boxer shorts and t-shirts.
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