J.C. Penney will also have to woo its workers
As the stumbling retailer tries to rebuild ties to shoppers, it has a massive employee morale problem to deal with as well.
Under ousted chief executive Ron Johnson, J.C. Penney (JCP) had a massive housecleaning, sweeping away thousands of jobs as it eliminated popular clothing lines like St. John's Bay.
Now, returning CEO Myron Ullman has a knotty problem on his hands: how to revive those brands with a company suffering from deep morale problems and an employee base that has shrunk by 23%, reports The Wall Street Journal.
When Johnson completed his first full fiscal year on the job, Penney employed only 116,000 people, down from its recent historic level of 150,000, according to the report.
While the ex-CEO argued that the job cuts were needed to boost Penney's financial performance, the opposite resulted: Loyal customers fled, with many angered at his decision to dump St. John's Bay. Sales plunged 25% last year.
St. John's Bay may have been a linchpin leading to Johnson's failure. MSN moneyNOW readers often cited the disappearance of the casual-wear clothing line as the reason they abandoned Penney stores.
"If JC Penney brings back the brands that they ditched, St. John's Bay women's jeans for instance, I will think about shopping there again......but not until then," one reader wrote on Thursday.
And it turns out that Penney is planning on bringing back the clothing line, which had brought in annual sales of a billion dollars, The Journal notes.
Why would Johnson single-handedly get rid of a brand that racked up such huge sales? The former Apple executive wanted to "de-frump" the stores and instead brought in edgier designers such as Cynthia Rowley. The problem, though, was that Penney customers had been happy with those comfortable clothing lines. Feeling alienated, many of them swore off shopping at the retailer.
Johnson misunderstood the store's customer base, which tends to be older than 55. One-third of its customers earn less than $35,000 a year, according to BloombergBusinessweek. Getting rid of coupons also alienated his price-conscious customers.
Penney plans to return coupon advertising to newspapers, activist investor William Ackman said on Thursday, according to Bloomberg. The company needs to "calm the vendors," he added.
But what to do about those morale problems? According to The Journal, the layoffs weren't pretty. Because Penney didn't have enough staff to cut people in face-to-face meetings, groups of employees were ushered into Penney's auditorium to hear the news. Sometimes more than 100 people were fired at once, the story notes.
With Ullman's plan to bring back St. John's Bay, he might be taking one step toward dealing with his alienated customer base. And getting rid of Johnson was likely a big boost to internal morale. According to the New York Post, clapping and laughing erupted last Monday at an employee meeting when word of his ouster was announced.
This is another reason most CEO's are just overpaid idiots. They make changed for the sake of change but have little regard for their employees or their customers. Old Coke and New Coke is a good example of how the guy at the top is just overpaid idiot.
There is a difference between innovation and self immolation and I bet the ex CEO does not know the difference.
I liked going to J C Penny since their clothes always seemed to be a fair value but seldom go anymore because they do not seem to carry anything I want to buy even though I has a $10 coupon.
and haven't gone back. I'm 59 -
I have been shopping JC Penny for decades. Used to love their catalog, then the changes started to happen with a new hipper catalog, I shop for big and tall at their store. Well I went into my local Pennies the other day and the store is a disaster to me with big and tall stuck back in the corner of the store with no inventory. What happened to Izod big and tall products? What has happened to JC Pennies??
I like St. John's Bay, however, also like the newer look too.. As a working woman who doesn't want to dress like my 80 yr old mother or a 19 yr old college girl, I think a nice mix is necessary. Also, I think clothing should again be separated by depts., i.e. women, plus, jrs, etc.
I do like the new pricing set up, but the old prices with sales wasn't so bad, but the new prices had me looking and shopping more
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] Equity indices remain on the defensive with the S&P 500 trading lower by 0.5%.
Market participants received just a handful of economic reports this week and none of them have caused a noteworthy reaction in the market. However, things are shaping up to be a bit different next week with a full dose of economic data on the schedule.
The week will start on a relatively quiet note with Monday's data limited to the June Pending Home Sales report. On Tuesday, ... More
More Market News
Investors are hoping the chain can emulate the rapid growth of Chipotle Mexican Grill.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'