J.C. Penny – The Weak Sister In Retail Family

JCPenney in Frisco, TX
JCPenney in Frisco, TX (Photo credit: Wikipedia)


 NYSE : $17.57
J.C. Penney was taking it on the chin Thursday after reporting weak Q4 results, with CEO Ron Johnson admitting the company had made big mistakes in its turnaround effort.

The retailer posted a loss of $2.51 per share, much wider than the $0.24 loss that analysts had expected while same store sales sunk by 31.7%. Internet sales, which have been rapidly increasing across the industry, fell by 34.4% at JCP. Revenue fell 28.4% to $3.8 billion. Johnson said that in his quest to “be the favorite store for everyone:, the retailer had made some errors, including marketing issues and an assessment that customers want simple pricing without constant sales.

He commented, “I had a personal conviction to deliver everyday value beginning with truth on the price tag. We worked really hard and tried many things to make the customer understand that she could shop anytime on her terms. But we learned she prefers a sale, at times she loves a coupon and always, she needs a reference price.”

Going forward, the company will be running sales, as opposed to “everyday low pricing” and will begin to offer some coupons.

Can J.C. Penny Avoid Being Crushed By Wal-Mart and Target


Thesis: We can’t  question Darwin / Survival of the Fittest –

Joust 2: Survival of the Fittest
Image via Wikipedia

The question is can J.C. Penny face the fittest and/or rebuild to meet the competition.

You may have seen the barrage of new ads for J.C. Penny. They are hoping to wean shoppers away from their addiction to sales and coupons. This mimics Wal-Marts’s low prices every day strategy – the question is – will America adopt that new focus.

When the car companies tried to end years  of ” employee discounts ” and sale events to get back some semblance of selling at fixed prices they quickly retreated.

There may be a disconnect between what the new ads say and the market place reaction. Two weeks ago executives predicted an upturn in 2012 – far above the Street estimate of $ 1.25  while we are seeing better employment numbers it is not yet translating to a buoyant time for retailers. As noted , J.C . Penny is still facing formidable competition not only from discounters but from ” old line ” retailers like a struggling Sears and even Macy’s.

The Company has announced savings via cuts to employment and reduced sales incentives . Have you ever bought more because service was reduced and things were not on sale ?

Conclusion: Wait to see the results – the shares may soon be ” on sale “.

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