Saturday, November 10, 2012

J.C. Penney Digs Deeper Sales Hole

CL this one's for you. QB

J.C. Penney Co.'s JCP -4.84% sales last quarter went from bad to worse.

The department-store chain, in the middle of a long and painful turnaround under former AppleInc. AAPL +1.73% retail executive Ron Johnson, said its sales fell 27% in the three months ended Oct. 27, a sign the company continues to stumble as the key holiday-selling season approaches.

The drop was worse than Wall Street analysts had feared, and shares in the Plano, Texas-based company fell as much as 10% on Friday before rebounding to finish down nearly 5% at $20.62 on the day.

Corporate Intelligence: J.C. Penney Needs To Boom, Just To Get Back To Square One

Penney's sales over the first nine months of its fiscal year have fallen by $2.7 billion, nearly equivalent to the annual revenue of store chainSaks Inc. SKS +0.50%

Penney reported a third-quarter loss of $123 million, or 56 cents a share—narrower than the $143 million a year earlier as the company cut costs and spent less on restructuring.

Mr. Johnson, who joined Penney as CEO a year ago from Apple's vaunted retail operations, said the company wouldn't diverge from the strategy he laid out last January of sharply limiting discounts in favor of broadly lower everyday prices.

But the strategy has hurt customer visits and sales, while new products and in-store boutiques have failed to draw enough shoppers to offset the decline. Same-store sales slid 26% in the quarter, while Internet sales fell 37% to $214 million.

Some of the company's tweaks to that strategy have hurt as well. In August, Mr. Johnson eliminated discounts that Penney had called "monthlong values," or long-running sales on popular seasonal items. It turns out the promotions were popular with Penney's customers, who spent more than $1 billion on such items during the first half of the year. Eliminating monthlong values cost Penney $20 million a week in the third quarter, Chief Financial Officer Ken Hannah said.

Analysts at Deutsche Bank DBK.XE -2.32% recently called Penney's no-promotion pricing strategy confusing to customers, noting that the company advertised 30% off clearance items in an email last month. Deutsche Bank also pointed to a recent in-store $10 coupon, free haircuts for kids and an offer for free family photos this month, saying Penney is "backtracking on its no promotion strategy, confusing customers, and we, therefore, remain skeptical of near-term improvement in business trends."


chicken little said...

Thanks, Queen.

I guess I have a better view of this company since a friend of mine worked in the 'office'. The company was teetering on change vs. elimination BEFORE this last CEO.

It is certainly a lesson in human nature, IMO. People don't believe in 'lowest prices'. They believe in COUPONS. Give them something to clip, download, or an application and they think they are getting a bargain. Never mind that the 20% off or some such is actually 20% off a higher-than-normal price. It's a SALE. Then you had this idea that you had to keep looking/shopping all month at Penny's to really see the sale on items. Riigghhtt. Like people have nothing better to do? Or the money for gas to go hang at the mall half the month? (Only teens have THAT much money!)

I see this most of all at Kohl's. They have a regular price of say a ladies top. Then they up that price so you can use your coupon. Then they put it back to a normal higher price during the sale when they offer Kohl's cash (spend $50 and get $10 BACK to use the next week!) It's a con game with 3 prices. The lowest price is during their 'lowest price' sale with no coupons. But people don't flood the stores on those days.

It is actually quite amusing. That said, most of their clothing now comes from Vietnam (as does much of Penny's) so I don't purchase at these stores. I'm hard pressed to find MADE IN CHINA any more. (That is also interesting!)

I've also noticed the quality of the materials has vanished. Since the price of cotton inflated, we are getting less cotton in our garments--so they aren't as heavy and don't hold up as well.

It is better to look for older garments in good shape (Goodwill, yard sales, etc.) OR follow my mother's advice which was to buy GOOD clothes as they will last BUT do so in styles that are timeless.

It is the old 'little black dress' attitude. You also take a smaller size. Why? Because designers of quality know their customers like to appear thinner than they are...hence they cut their clothes differently.

I love to study human nature. Ask for clothing donations for the recent hurricane and you'll get summer clothes, clothes that are rags, and clothes that are so dirty you wouldn't clean a dog with them. We once knew missionaries in Brazil who asked for tea bags. One church sent them a barrel of them which they had to pay duty on--only to open the barrel and find USED tea bags.

Gotta love us. We simply are an incredible species!

Queenbee said...


You should have a honorary degree in Anthropology. If universities give them away then I, being the Queen of The Hive hereby grant you one based on your great insight into human behavior.

I'm glad that Penny's new ideas blew up in their face. I have boycotted them since you brought it to my attention. I think I posted another article a month ago about them cutting staff to part time.

Everyone have a great weekend and I will spout off from time to time. Busy action with College and NFL Football this weekend.

Queenbee said...

From ZH
Gold And The Potential Dollar Endgame

chicken little said...

Happy Veteran's Day. Besides thinking about those who serve, take a moment and think about those who SUPPORT those who serve. Sometimes, we have as hard a job as they do but in a different way...and we don't get the help ;-)

Mammoth said...

Yes indeed - we should remember the veterans who served in America's wars.

From WWII to the present 'Oil-wars' now underway, here is a tip of the hat to not only those who reisked their lives in battle, but those who supported the fighting men as well.

My father is a WWII veteran who served in the South Pacific. He, and millions of others, were slated to invade Japan, and what prevented this from happening - and thousands of young American men from an early death - was the detonation of two atomic bombs.

Folks can try to rewrite history and look at WWII from a different perspective more than 60 years after it happened, but fact is that using nuclear weapons ended WWII. Period.

Queenbee said...

Mammoth you are right. The victors always write or rewrite history.

Queenbee said...

As for the Vets we must do everything we can to protect their benefits and pensions.

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