J.C. Penney is not looking fashionable
The American department store chain is in the midst of a long and painful turnaround under its one year active CEO Ron Johnson (ex Apple) and sales fell 27 % in the three months ended October 27 and sales over the first nine months of its fiscal year were falling by 2.7 billion, almost comparable to the annual revenue of store chain Saks Inc.
The company presented also a third quarter loss of USD 123 million (USD 143 million). Johnson will not give up his strategy, but his strategy (limiting discounts in favour of broadly lower everyday prices) has hurt customer visits and sales, while new products and in-store boutiques introduced have failed to draw enough shoppers to offset the decline. Same store sales slid 26 % in the quarter, while Internet sales dropped 37 % to USD 214 million. In August Johnson eliminated discounts called “month-long values”, but customers loved it and had spend more than USD one billion on popular seasonal items in the first half o the year. By eliminating them it costs Penney USD 20 million per week in the third quarter. Since Johnson joined the company, Penney has cut prices 40 % on average. One wonders on how long he will be in the driver seat if this situation is to continue.