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Current Status

J.C.
Penney Co. reported
a
narrower
quarterly loss and higher sales which points
towards a turnaround from the dismal
performance of the previous couple of years.
Sales at existing stores increased 4.1% for
the three months to Aug. 1, helped by
double-digit sales gains at Sephora shops in
Penney
stores,
as
well
as
strong
performance in the mens, home and fine
jewelry categories. Total sales rose to $2.88
billion from $2.8 billion a year ago.
This positive result can be credited to the
new Chief Executive Marvin Ellison who was
made CEO on August 1, 2014. The progress
in recent quarters has pulled Penney back
from the brink of financial collapse. But it
still hasnt climbed out of the hole it fell into
under former CEO Ron Johnson, a former
Apple Inc. executive, who crushed sales by doing away with discounts and
popular house brands.
J.C. Penney was still far behind in some of the basics of retailing, including
how it replenishes inventory, prices goods and operates its e-commerce
business. J.C. Penney missed out on sales in the first half of the year,
because inventory wasnt being sent to stores quickly enough. And when it
comes to pricing goods, J.C. Penney does it the old fashioned way rather
than using data and analytics.

Penneys results come amid a string of soft


second-quarter reports from retailers like
Macys Inc. and Kohls Corp. this
week.
Macys cut its forecast for sales growth this
year to zero after declines in quarterly
revenue and earnings, intensifying pressure
on the retailer to find new ways to grow
beyond
its
core
department
store
business. Kohls, meanwhile, attributed its
weak sales to the shift in tax-free back-toschool sales in some states from July into
August, falling outside of the quarter.
Penneys loss narrowed to $138 million from
$172 million. Gross margin widened to 37%
from 36% a year earlier, helped by less
clearance and promotions.

Current Strategy
The new focus isn't on trying to recreate Penney as it was before Mr. Johnson
took over in late 2011 because so much about retailing has changed since
then. Instead, the focus is on keeping expenses tight and emphasizing on ecommerce. The retailer will add items to its website that it doesnt carry in
stores, so it doesnt lose sales when shoppers cant find everything they are
looking for. The idea is to make J.C. Penney a more efficient and low-cost

operator.

During Johnsons Time


Many of the changes that were brought by
Johnson are as follows:-

Everyday
Month Long
FairValues
& Square
Event
Best Price Fridays

1. Changing the logo thrice in three years


2. New spokesperson Ellen DeGeneres and the controversy
redesigning the stores
3. Introducing the Fair & Square pricing plan
4. Changing the sales structure (removing commissions)

Reactions to new strategy


1. No more games, no more fun, no
reason to visit J.C. Penney on a
regular basis

2. Customers who got habitual to


coupons and sales went to Target
and Walmart
3. Customer mindset about sales was
hard to change but the
management stuck to it.
4. Bringing down 590 sales events to 3
simples tiers didnt do the trick.
5. Johnson decided to further simplify
the pricing structure and got rid of
Fair and Square and bumped up
the promotional spend to run circulars about Friday clearances.

and