J.C. Penney's agony continues
Shares fall nearly 13% as investors continue to be skeptical about CEO Ron Johnson's turnaround strategy. To entice shoppers during the holidays, Penney will give away buttons with codes that could lead to prizes such as a Disneyland trip.
Updated: 5:56 p.m. ET
If you're Ron Johnson, touted as the wonder worker who would turn J.C. Penney (JCP) around, you can't be having much fun Monday.
The company's shares fell $2.67 to $17.97 today, their lowest price since March 2009. They're down 57% since February and nearly 15% since Thursday.
The problem Johnson faces is twofold. Right now, Wall Street is most definitely skeptical that Johnson's turnaround plan, which entails turning the department store chain into stores with a series of branded shops inside, will succeed before the company collapses. Credit Suisse downgraded the shares to "underperform" today and cut its price target 40% to $15, The Wall Street Journal noted.
And shoppers apparently are not any more excited about the business either. Fiscal-third-quarter sales, reported Friday, were down 26.1% from a year ago. The company reported a loss of $123 million, down from $143 million a year ago, but, well, big whoop.
Some 23% of third-quarter sales was clearance, up from 15% a year ago. The fourth quarter will be crucial to Penney's future and Johnson's.
The slump in Penney's stock price contrasts with the action in rivals Wal-Mart Stores (WMT), Target (TGT), Ross Stores (ROST) and TJX Companies (TJX). All are higher in a market that's modestly higher.
Johnson was hired away from Apple (AAPL), where he was in charge of the company's retail stores. But one problem he has is that he isn't selling iPhones or iMacs or iPads. He's selling jeans, socks, T-shirts, dresses, shoes and a host of other products that don't have the panache of Apple products.
One of Johnson’s biggest goals was to break the culture of sales and coupons that its customers had gotten used to, but he’s struggled to change the company’s pricing structure.
USA Today reported Monday that Penney's employees will be handing out more than 80 million small, holiday-theme circular buttons to customers between Black Friday through Christmas Eve. Each has a code on the back that, when entered on J.C. Penney's website, reveals whether a customer has won a prize. Some of the possibilities include a trip to Disneyland, tickets to Ellen Degeneres' show or J.C. Penney merchandise or gift cards.
Moreover, Penney will be holding at least two sales this year: on Black Friday and Cyber Monday, Johnson told USA Today, promising "the lowest prices ever in the history of our company."
That comes despite promising a new store concept and a consistent pricing policy.
More from Top Stocks
CRAZY8S=I was wrong.The Repubs were bitter and nasty before and after the election.All
those idiots on FOX said Romney would win big .Why do people listen to right wing nazis
who are always wrong?Dick Morris was almost right.He said Romney would get over 400
electoral votes.206 is close.
Wow,those are really ,really,SUCK prizes and 80 million buttons,wow one in 80 million,the chance of a lifetime for nothing.In this down economy,how about cash,large buckets of cash.Tickets to ellens show,you would probably win another prize and jcp would televise,big whoop.Tickets to disney,they promote an immoral gay lifestle by having gay days at parks,on ships,at hotels,but not black days or hispanic days or muslim days,or jewish,catholic,protestant or Budda worshippers days or American Indian Days.
The sooner JCP goes out of business the better.
The same clothes,i looked at in sept.2011 have still not gone down in price.
JCPs business model is lost,they have a moron minding the store,they deserve to go belly up,i bet they cut back on salaries and benefits to their lower eschelon employees but not their executives.
This year,instead of a turkey for Thanksgiving or Christmas,the employees will get a coupon for 25% off a pound of balogna.
He did the same thing Circuit City did. He took his best people off commission which forced them to leave. That left the company with a bunch of 18 year old kids standing around texting on there Iphones not giving a **** about customer service. Plus there is no incentive to shop there its always one price. No sales? If he wants a model of how to run a department store take a look at Nordstoms and start marketing to that customer NOT the Target, Kohls, Walmart shopper. Bring back some class Ron its not Target. I like how these people talk about turning around Penneys. JCPenneys was fine before he took over. Do your homework and check the value of its stock before and after he took over. He needs to be fired while the company still has time.
I can't tell you how tired I am of Ellen Degeneres. I also no longer use Cover Girl cosmetics because she is their "spokes-model". Nothing about her makes me want to emulate her by buying the products she endorses. I certainly am not interested in winning tickets to her show. That's no prize as far as I am concerned.
The sad thing is that, unlike competitors like Wal-Mart, Target, Sears and many others, in consideration of its employees and the meaning of the holiday, JC Penney is one of the few major retailers who won't start its Black Friday sales till 6am on Friday (the day after Thanksgiving).
Its sales number got burned last year because JC Penney did the same thing for Black Friday 2011. Guess the nice guy (and good employer) will get burned again this year.
Our local J.C. Penney's store in Ann Arbor MI was just renovated inside. Although I appreciate the extra space between clothing racks (gained by eliminating nearly half the display racks) I am not pleased by the changes. Previously the store had two checkout counters in the Men's Dept, now they have zero. Not even a Customer Service counter in the Suit Department!
Any person intending to purchase garments or accessories in the Men's Dept now has to carry them half-way across the sales floor of the store to reach one of the four Customer Service counters evenly distributed throughout the Women's Dept. Lord help anyone intending to buy a men's suit that needs to be altered.
Obviously Penney's does not want male customers, so I will gladly take my business elsewhere.
Their clothes are drab.Like Sears they need a makeover.I hate to say it but Wal-mart is the
one shop store.Their clothes arn`t great and their meats are crap but they`re beating the
crap out of retailers.Consumer sentiment is way up now except on these sites where the
Repubs are still bitter over the election.They should put their big boy pants on.
Copyright © 2014 Microsoft. All rights reserved.
VIDEO ON MSN MONEY
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.