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.

By Charley Blaine Nov 12, 2012 4:07PM

Credit: Mary Altaffer/AP Photo
Caption: Customers enter the JCPenney store in the Manhattan 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.

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29Comments
Nov 12, 2012 4:55PM
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The pathetic part of all this is that the CEO will probably get a 3 million dollar bonus this year. Or be asked to leave and get a 10 million dollar severance package.
Nov 12, 2012 4:50PM
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Let's be honest, shopping is supposed to be full of gimmicks, coupons, and crazy stupid sales.  Admit your failure Johnson, your not an Apple employee anymore.  People like coupons, the sense that they are getting a deal, and a piece of paper that says 25% off that customers can walk into a store with almost guarantees that they will be looking to find something to use it on. 

Hope I win the trip to Disney!
Nov 12, 2012 4:49PM
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Let's see, last time I went to JCP I walked around the store for at least 10 mins looking for someone to assist me take the ink tag off they left on my son's $42.00 pair of Levi's. It was not a good experience and their prices and deals stink! Not to mention, the store is different every time I go in there.

Nov 12, 2012 5:24PM
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JCP is on a slow agonizing death.  Always low prices except for the third Friday of the month when they have a clearance sale and on black friday and cyber monday.  lol   Who in their right mind would shop at JCP at any other time, but when they have their sales?  Here's a novel idea for JCP's Board of Directors, bring in a new CEO who actually has some retail merchandising experience.  Tough concept to understand I know, but might actually help.  lol  
Nov 12, 2012 5:17PM
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Ha Ha ... another disguised coupon in the form of "buttons".  First the $10 "gift" (coupon), now a holiday "button" (coupon) with a 1 in 80 million chance at a trip to Disneyland.  Free haircuts to anyone brave enough to bring in their youngster and wait for their turn on "free Sunday" (and I'm sure the stylists love the tips that surely come from freebie-seekers).  And family portrait month for a free 8x10 in an age where digital prints aren't all that hard to come by anyway (since not all JCP stores have a studio anyway).  I cannot imagine anyone dumb enough to waste precious Black Friday time and/or money on JCP when there are so many better options.  Be prepared for the bloodbath that will be the Q4 report, although I'm sure Ron will spin it as "on track".  Investors are tired, and today is another nail in the impending coffin. 
Nov 12, 2012 5:42PM
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unless you live close to where the "ellen Degeneres' show" is film you really wouldn't want to win tickets. i sure wouldn't fly on my dime to just go to her show.
Nov 12, 2012 5:21PM
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Are you sure this guy Ron Johnson doesn't work for a rival company in real life?  How long are the stockholders going to be duped by this guy?
Nov 12, 2012 6:43PM
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No worries, Ron Johnson will be jumping out of Santa's sleigh with his Golden Parachute!
Nov 12, 2012 6:20PM
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Went to JCP on Friday night and they were closing the doors at 9:00!  Kohl's was open until midnight with a night owl sale and percentage off coupons available.  Guess where we spent our money.  Also, JCP didn't have the times posted on the door because they have their new "modern" look.  I had my infant grandson with me, had gotten him out of the car and into his stroller, and just entered the store when the announcement came they were closing.  I couldn't believe it.  How difficult would it be to remain open on Friday and Saturday nights until 10:00?  Especially this close to Christmas.  I miss the old JCP - bring her back please!
Nov 12, 2012 7:03PM
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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.

Nov 12, 2012 7:04PM
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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.  

Nov 12, 2012 6:03PM
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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.

Nov 12, 2012 6:28PM
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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.

Nov 12, 2012 6:39PM
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I've never been a big JC Penney fan, but the store's epic sales, particularly the sales close to Christmas, made Penney's a must-stop just prior to the holidays. This year, Macy's, JCP's next door neighbor in our local mall, got the spending nod. JC Penney looked more like a embarrassingly tepid A & F wannabe and not the solid, discount-producing Christmas cow that I've grown to know and love.  Call it a day, Penneys; lesson learned. Ditch the ill-conceived scheme to lure upwardly mobile hipsters, techies and pouty collegiates: Hollister has those demographics nicely covered. Penney's, my friend, is a mainstay for bargain hunting suburban housewives and grandparents on a budget. Bargain bins or bankruptcy - the choice is yours!
Nov 12, 2012 6:08PM
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So the new plan was to raise the prices and throw the gay agenda up our _____ ? How's that working out for ya? I'm still boycotting JC Penney - hope all the gay/lesbian community can save them now.
Nov 12, 2012 8:06PM
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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.

Nov 12, 2012 8:54PM
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It's really queer how their sales have plummeted - almost like they alienated a large part of their customer base. Oh well, I'm sure Captain Ron will don his golden parachute, declare it a success, and bail out while leaving the rest of the employees to spiral in to impact.....
Nov 12, 2012 5:07PM
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I dont think alot of business will be doing very well under obama.
Nov 12, 2012 5:27PM
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What store doesn't play the coupon, "everything's on sale except...." and mid season, annual, semi annual, back to school, holiday, Veteran's Day, Memorial Day  and anything else you can think of sale?  The only things I consider truly on sale are the items on the clearance rack.  Sales are marketing games for every business.
Nov 12, 2012 6:31PM
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i like the store and everyone has been helpful
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