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.
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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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.
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.
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.
I havent seen much of a price differences since they have changed. They still need to have sales!!!
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