J.C. Penney Reports Loss And Plummeting Sales In 1Q

[Purveyor]

(05-15) 13:22 PDT NEW YORK, (AP) --

J.C. Penney is reporting a bigger-than-expected loss and plummeting profits in the first quarter as many of its customers are rejecting a new bold pricing strategy that puts an end to rampant discounting in favor of everyday low prices.

The department store chain says it lost $163 million, or 75 cents per share in the quarter ended April 28. That compares with a profit of $64 million, or 28 cents per share in the year-ago period. Revenue dropped 20 percent to $3.15 billion for the quarter.

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http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2012/05/15/national/a132014D36.DTL

[Sherman A1]

1. It would appear that the new strategy was

not such a terribly good idea.

I think Macy's found that out a few years back when they purchased May Department Stores & tried to eliminate their coupon programs.

[Jello Biafra]

2. Some freeper will say it has to do with Ellen and the lesbian ad campaign....

I bet you'll see that somewhere.......

[Liberal_in_LA]

8. that's what they been saying.

[Horse with no Name]

3. I went into Penneys the other day

and hated their new price point pricing.

Really. HATED. it. Left without making a purchase.

It really made it feel like a deep discount store...

[Liberal_in_LA]

9. what's to hate?

[Horse with no Name]

16. Speaking for the JCP in OUR area

I've been to ones in different areas that were different...but the atmosphere went from a nicer retail store to that of Walmart. There were no sales people on the floor to ask for help, and the lines were deep--even in the shoe department.

The merchandise was thrown onto tables--nothing was displayed.

The quality of stuff seemed much cheaper...yet the prices didn't reflect that.

It was very disappointing because JCP in our area was a fairly nice place to shop where you could always find nice clothing of moderate quality for a decent price.

They had cheap clothes moderately priced.

I can surely see, if our store is reflective of what has happened to the chain, where it won't last. It won't attract the middle income earners in OUR area--because of our few choices, if people WANT cheap clothes, they go to Walmart or Dollar General.

There are also a couple of other stores in the same center as JCP that also have nice clothing at moderate prices (and both run frequent and substantial sales--for example...end of season can pick up $45 jeans for $7) and have always been head to head competition for them...and I expect that they have picked up their business.

[Liberal_in_LA]

20. ah.. I've experienced that sort of thing - different quality of store based on the neighborhood

upscale department store. One of its stores located in poor(er) / minority neighborhood = totally different merchandise and service.

[Horse with no Name]

22. I've noticed this with JCP before

The one in our town is a nicer store. They had people in the men's department who taught the boys had to tie ties...and how to put a suit together. They had a nice lady that would help you fit for a bra or the guy in shoe department fitting you to your shoes. The next closest one is a little nicer than ours which in essence, means more employees to make the shopping experience more desirable.

But it is even more than that. By having a nicer store with salespeople on the floor--that created jobs. Having a discount type store where everyone amasses at one register without any other people--loses jobs. Precisely the reason that I don't shop at Walmart.

While traveling, went to one in Phoenix several years ago and it was a discount store--and yes, it was in a poor area. NO employees to be seen across the entire store except at the cash stands.

I don't know why JCP would do that, but, they do. I will take my business to one of the other (fairly) local department stores who still hire people to take care of the customer.

[YellowRubberDuckie]

4. A friend of mine use to be a very loyal JCP customer...

...but she said they do discount, but that is after jacking the price up so high it's insane. Apparently the whole thing is a sham. Now she just goes to Target and Kohl's.

[SoutherDem]

6. Heavy mark-up and discount

According to my friends who still work at JCPenney said they did take deep discounts to make the new daily price equal to the normal sale price. I think the discount prices your friend is referring to are the monthly sales which are marked down to the "Biggest sale of the ...." price. I took their word for it, I haven't purchased anything since the change. One did say customers keep wanting the new lower prices with the old discounts which can't happen, they would out out of business without a doubt.

But I will say this about the customer buying patterns

At one point during my 18 years at JCPenney there was a line of product which were "everyday value" priced basically less mark-up but never goes on sale.

Due to truth in pricing laws in some states, JCPenney had a policy that a product had to sell at it regular price at least 50% of the time and couldn't be on sale for longer than a specific period of time (think it was 4 weeks, but it was a while back).

For departments like jewelry if something isn't on sale people won't buy it. So, the "everyday value" items were pushed during non-sale periods.

There were a few items which were in both the regular selection and the everyday value selection, exact same item with different lot number to keep them apart.

One lot number was given the full mark-up and went on sale during sale periods. The other lot number was marked-up less just as the name suggests it was sold everyday at the same price as the other lot number when it was on sale.

One would think the everyday value items would sale the same during sale periods and better during non-sale periods.

But no! Customers always wanted a "sale" price. During a sale they would purchase the "sale" item because it was on sale even though it was the exact same price and the exact same item. During the non sale period they still wanted to purchase the full price item because it was "better" and would wait for it to go on sale. I will say it again it was the EXACT SAME ITEM with the EXACT SAME PRICE!

As an ex retail manager I hate what has happened to the retail world. With the exception of Apple, a few auto makers and a couple of other companies merchandise is marked up excessively then marked down to give a false sense of value. The days of a fair mark-up which people were willing to pay day in and day out with occasional small sales are long gone.

[Liberal_in_LA]

11. I posted an article about this recently... Walmart - trained us to see only price rather than value

http://www.democraticunderground.com/1002665701

Is your stuff falling apart? Thank Walmart - trained us to see only price rather than value

[YellowRubberDuckie]

12. Saw it, read it...

...I just don't think I posted.
I don't go to Walmart. It's not a good place to go, I can't stand the people who ignore their dirty, screaming children and they aren't any cheaper than Target. I'd rather go to Target anyway. I normally pay the same, may be just a bit more, but I know it isn't going to fall apart, and it is an entirely different experience. The people who work there are actually happy to be there and are friendly! I had a nice conversation with the lady who checked us out this evening during our soda/cereal/Popsicle/candle run this evening. At Walmart, I'm lucky they don't THROW my change at me.

[SoutherDem]

13. Excellent Post

I didn't say that because I was talking about price and mark-up, but the other side to low prices is low quality. I purchased a leather coat from JCPenney when I first started working for the company 1986. Other than a small rip (all my fault) it is like new. I bought a replacement (i thought) right before I left the company it lasted only a couple of years.

Thank you Walmart.

[gvstn]

19. JCP is the wrong kind of store for a no sale policy.

As an ex-retail manager I hate what has happened to the retail world. With the exception of Apple, a few auto makers and a couple of other companies merchandise is marked up excessively then marked down to give a false sense of value. The days of a fair mark-up which people were willing to pay day in and day out with occasional small sales are long gone.

That is it in a nutshell. I saw JCP's pricing policy not working when it was announced because people have been trained to "never pay (the new inflated) retail". I know plenty of people that won't buy anything unless there is a sale sign on the display. They don't even look at the price tag to see if they think the price is fair for the item. The retailers have only themselves to blame. They have gone from maybe a sale a month to a sale every weekend. That really makes you question the fairness of the "regular" price. Macy's is the one that seems to have a sale every single week. It just makes no sense to me. But it must work because people flock to the "sale" rack. JCP can't go back and say "we don't do sales now" after everyone is used to looking for that sale sign. Only retailers that have unique merchandise can do that now.

My brother is always crowing about how he got a $68.00 shirt for $29.00 at Kohl's. It drives me crazy. He got a $29.00 shirt for $29.00.
Kohl's brings in an item with an inflated retail price. Sells it at that price for two weeks to anyone that really loves it. Then it goes to 30% off for 2-3 weeks. Then 50% off until it is on the leftover rack by the sixth week. That is a marketing strategy not a real discount.

Calvin Klein underwear used to sell at retail except for the semi-annual sale of 25-33% off. That is a sale. You can buy what you need at retail then wait and stock-up during the sale. You don't pay one price on Monday and yet a different price every weekend because it is "on sale".

[SoutherDem]

23. Trained is an excellent way of putting it.

As a manager I saw the cost. When I started the mark-up was reasonable but the sales were few and far between. They also weren't outrageous amounts, usually 10-15%. For like the day after Thanksgiving 25%. By the time I left 18 years later the mark-ups were high, but the basic sale was 25%, we pushed the maximum number of allowable sale day for an item, we were constantly having the biggest sale of the something or the lowest price of the something sale where the discounts would be 50% or greater.

I have never understood why people do not get that to give a big discount there has to be a big mark-up.

[SoutherDem]

5. Not surprised

I worked for JCPenney for 18 years. Left when my position was eliminated and chose the separation package instead of the position offered me.

Friday I was at two friends retirement party, three others retired with in the last couple of months and one more is leaving this week. Don't misunderstand me we are not talking about 62-65 year olds, all were buyouts of those with enough time with the company. They have been cutting much of their experienced labor. Another friend told me they were hiring right and left while cutting his hours.

Apparently the new pricing plan isn't working and if it isn't working in the 1st quarter I hate to see what will happen in the 4th quarter if they don't change back to mark-up and put on sale.

For myself, the last two times I was in the store I found their selection to be geared toward, well certainly not me.

I heard they went with an ex Apple executive as their CEO. Well, the Apple plan works for Apple but apple has an unique product. JCPenney is somewhere between a upscale Walmart and a Belks nothing unique.

Hey, guys. Why not go back to the Penney Idea. Since you are getting rid of everyone with experience you may not know anyone who remembers it. It was a list of quotations by Mr. Penney. It got the company through its first 100 years.

[progressoid]

7. Ive heard similar a similar story from a JCP employee.

That the new pricing plan isn't working.

[JI7]

18. to me it seemed like their selection was not as good as before when they changed the pricing

so it probably isn't just the pricing but they probably don't have as much selection or good stuff.

i agree about employees also. i had a few good people. the last time i was there the person working at the register was really nice. she scanned the pants and it was higher than i thought. i got it from some section where the price was lower but i assumed maybe it was misplaced. i said it was ok. but she changed the price to the lower price i originally thought it was.

but there are some employees that don't seem to know or even care much. i don't have a problem with people not knowing, especially if they are new. i can tell they are trying to help. but some just seem not to care or don't want to be bothered.

[Raine]

10. That's a shame, I've always liked Penney's. I like the real department stores

I think it will be sad if they all go under. I hate to see the day when there is nothing but big box and discount stores ... when the only stores left are ones like Big Sam, Walmart etc.

[TwilightGardener]

14. I'm afraid of that too. That's the way it's been going for years.

[HeiressofBickworth]

15. I was in a Penneys store recently

The first time in years. When I was working, I used to shop there because they had a line of large women's clothes that fit me quite well. Now I only go to the mall once every couple of years (I'm retired, low income, no need for shopping). I looked at some items and was confused about the pricing. Now, I'm not stupid (ok, keep it down) but I was confused by the price labels. They were just little strips with numbers and, at first, I wasn't even sure it was the price tag and not a stock number. So, if I can't figure out the pricing, others are having the same problem and giving up and going away.

My advice to Penneys is to change their price tag to a bright red flap of cardstock reading something like: PENNEYS' LOW LOW PRICE. or WE CAN'T SELL IT ANY CHEAPER THAN THIS. Or at least something to get customers' attention and show off their low price. Hiding their low price on a little strip which is hard to find in the first place is just putting potential customers off.

[JI7]

17. i use to work at a small store where we put some things on sale but raised the original price

one example is some top we tried to sell around 20 dollars . we moved it to some discount rack and changed to original price to 39.99 and put it 50 percent off and we sold them.

[Tallulah]

21. Damn, that's bad news

I outfitted my whole house with drapes from JCPenney. I couldn't make them any cheaper or better. Nice quality. Good prices, many styles.

Did some Christmas shopping there, wasn't impressed. Matter of fact, it was a total mess. This was before the new Penney's pricing started. The mall stores are horrors. Finding one in a small shopping center is much better. Cleaner, better organized.

Lately I've been doing some online shopping there. JCPenney has online prices that are reasonable. I bought a king sized bedspread, very nice, under $100. I just got a table for my entryway delivered not 2 hours ago, very nice.

I hope they don't fold. I'm kinda liking their internet prices.

[madrchsod]

24. penney`s drapes are sew in the usa!

my wife and i used to sell high end drapes during the 80`s. jc pennys drapes are very good drapes for the price...espically when they are on sale.

[HiPointDem]

25. I worked at JCP before college. In my store there was the store floor, then a balcony with offices.

Office people passed messages on what was basically a long old-fashioned overhead clothes line on a wheel. You hooked the message to the clothesline and rotated the wheel. It was very cool.

I loved JCP because of their excellent selection of work-wear (coveralls etc) which was in the basement. Best selection & prices in town.

I haven't seen JCP sell workwear in ages. I mourn the old JCP. It was middle-class/working class then, but classy. Now it's just another trash store.

[unkachuck]

26. I knew it....

....the big sucking sound I've been hearing, WAS the economy....

....slick willard (the rich wall-street Mormon, understander of economies and professional republican candidate) needs to get back to work and create some corporate jobs to substantiate his claim and to help pull J.C. Penney out of the red....

....but beware of slick-willard and other wall-street jackals in for the kill....for without customers, 'rampant discounting in favor of everyday low prices' will not help J.C. Penney, their employees or their families survive....

[a kennedy]

27. I don't do Target or Mall-Wort

Target, Best Buy Angers Gay Customers By Making Contribution to GOP Candidate

by Emily Friedman

When Randi Reitan heard about Target's $150,000 donation to a Minnesota-based political group backing a gubernatorial candidate with penchant for opposing gay rights, she marched straight into the popular superstore and cut up her store credit card.

"I had to speak up and so I decided to go to my Target, talk to the store manager and tell him that I just couldn't shop there anymore," said Reitan. "Then I cut up my Target Visa card."

Reitan, who says she has dedicated her life to gay rights after her son Jacob came out 10 years ago, isn't the only one upset by the discount department store's move.

Gay rights activists and loyal Target shoppers are furious with the company after it contributed $150,000 to MN Forward , a political group that has endorsed and is paying for ads for the Republican gubernatorial candidate Tom Emmer.

Emmer, who will face the winner of the Democratic gubernatorial primary and an independent candidate in the general election this November, is against gay marriage.

On Emmer's website he defines marriage as a "union between one man and one woman" and he has come under fire for his $250 contribution to a Christian rockband that has been known to speak harshly of gays.

http://abcnews.go.com/Business/target-best-buy-fire-campaign-contributions-minnesota-candidate/story?id=11270194#.T7MuAO21m5R

[zazen]

28. Design a beautiful sales tag that says "retailers' recommended market price"

that represents the estimated industry mark-up, followed by something like "JC Penney's negotiated price," in larger, bolder font, with the actual sales price.

It's got to be a seriously well-designed tag.

Customers will feel that JC Penney is a broker of designer clothes rather than a giant warehouse.

And, this will dig more at other retailers by implying they're all marking up those prices to that first rate. Same strategy, just different delivery.

[NNN0LHI]

29. About everything they sell is imported

There aren't enough people working in the US making good money any more to buy their stuff.

Its the same stuff Walmart sells at higher prices.

How many people can afford higher prices for a "name", when they are working at McDonald's for minimum wage?

These places have screwed themselves.

Don