Time for JC Penney to say goodbye to CEO?
The beleaguered retailer posts yet another dismal quarterly earnings report.
J.C. Penney (JCP) CEO Ron Johnson continues to offer investors more spin than a dreidel at Hanukkah instead of actual results. His job is now clearly in jeopardy.
The iconic Plano, Tex., retailer Friday posted quarterly results that were even more dismal than Wall Street had feared. Its net loss narrowed to $123 million, or 56 cents a share, versus $143 million, or 67 cents, a year earlier. Total sales plunged an eye-popping 26.6% to $2.93 billion. Excluding one-time items, the loss was 93 cents a share. Wall Street had forecast a loss of 7 cents on revenue of $3.27 billion, according to Dow Jones. As earnings misses go, this one's huge.
"Today, JCP is really a tale of two companies," he said in a press release. "By far the largest part of our store is the old J.C. Penney, which continues to struggle and experience significant challenges as evidenced by our third quarter results. However, the new JCP, centered around the shop concept, is gaining traction with customers every day and is surpassing our own expectations in terms of sales productivity which continues to give us confidence in our long-term business model."
It's hard to see what he means. Same-store sales, a key retail metric, plunged 26.1% during the quarter, indicating that Johnson's store-in-a-store strategy, isn't gaining traction. His gimmicks, such as free kid's haircuts and family photographs, while interesting are not enough to convince these people to actually buy J.C. Penney merchandise.
Johnson has got plenty of self-confidence. Recently, he told Fortune, "We're going to create an entirely new retail model that's built for the next 100 years." Some in the retail world are still convinced that Johnson is a genius who needs more time to realize his vision.
"Call me crazy, but this man has a reputation for vision and a track record that prompted members of the J.C. Penney board to hire him in the first place," wrote David Selby, a former Sears (SHLD,) executive, in Ad Age. "They wanted disruption, and they got it -- but disruption is very, very messy and takes time."
While Selby has a point, his call for patience doesn't carry the same weight as Bill Ackman's. The head of Pershing Square Capital, which owns about an 18% stake in J.C. Penney -- far the retailer's largest shareholder -- earlier this year had argued that the retailer's future under Johnson was bright. Whether he still feels that way is not clear.
If Johnson fails to produce decent results during the holiday season -- and the odds are against him -- the board will be forced throw in the towel and fire him. J.C. Penney would then be forced to sell itself at a fire sale.
Jonathan Berr does not own shares of the listed stock. Follow him on Twitter@jdberr
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For 38 years most of my curtains, bedroom textiles, clothing (4 children), my and husbands work clothes and more came from Penny's. I estimate average of $20+ a month for all that time. I bought washable curtains 2 years ago that lost all shape and lining stuck together the first time I washed them. Store did not give credit or anything because year was up. The past 2 years the jcp brand quality has lowered and the claim of lower prices does not hold up when the same brands can be purchased elsewhere at better sale price PLUS 20% or more coupons.
Yesterday I shopped with my $10 coupon and looked for sweaters and jeans for husband. Ended up with a $14 sale price on a necklace for myself as I say nothing else I wanted. I did the same with last coupon...the store made $0.36 on that pair of earings!
I rarely bother to look any more
What were they thinking would happen when they remade a store built on the authentic family into one catering to faux families constructed so as to lend an appearance of respectability to sexual depravity?
The new store concept "sucks". You walk and and can't find a thing... not to mention a register or any personnel to assist you.
I went to return an item I had ordered online and spent 20 minutes roaming the store to find someone to help process the refund for me. There was no one upstairs in the "Customer Service" area where you pick-up orders placed online.
I couldn't find one register in any of the ladies' departments, only the normal men's section when I walk in and then one register upstairs in the Kid's Department. There isn't even a register located any longer on the lingerie section.
Unless they change back, I don't think I'll EVER shop there again.
Another causalty at the benefit of Wal-Fart. Wake up people and support an American business rather than a company that buys their products from China and India.
I am a 50 something year old woman, not a doctor, not a lawyer, more like an Indian Chief and I can't find anything in the store that isn't geared toward a teenager. Bring back the 80's and 90's. Bring back the customer service and the quality.
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