Posted on 05/17/2012 4:54:55 AM PDT by Caipirabob
J.C. Penney (JCP) shares tumbled Wednesday after the retailer reported a much wider-than-expected first-quarter loss, suspended its dividend and saw weakness across all core metrics.
In an apparent rebuke to new CEO Ron Johnson's strategy to change the company's focus from discounts to everyday low prices, total sales fell 20% while same-store sales declined 19% and gross margins fell to 37.6% from 40.5% as foot traffic in the stores dropped 10%.
"Our marketing isn't doing the work," Johnson said in a conference call. "We've got to get our pricing across. Coupons were a drug, they really drove traffic. [Customers] need to understand the value we're offering."
But it's Johnson, not J.C. Penney's customers, who has a problem understanding what the retailer needs, says Howard Davidowitz, a veteran retail banker and CEO of Davidowitz & Associates.
"He's caused incalculable damage," Davidowitz says of Johnson, who joined J.C. Penney last year after running Apple's (AAPL) retail operations. "The customers are everything. They don't know what the hell he's doing."
(Excerpt) Read more at finance.yahoo.com ...
wouldn’t set foot in the place once they openly marketed out of the closet......
Obama has made the very same mistake.
J.C. Penny is still in business????????
While lower prices every day may make more sense for a shopper's budget - most hard core shoppers are looking more for a thrill of “saving” money - even if they end up spending more overall.
Shopper A goes to a store with low prices and no sales - buys the same 10 items and spends $300.
Shopper B goes to the store with SALES - buys the same 10 items and spends $330 - but is SO HAPPY because ONE of the items purchased was ON SALE - and look how much was saved!!!!
It is a gimmick for not very smart people - like lotto or casino gambling - and no one ever went broke by underestimating the intelligence of the general public.
(80’s joke - F*ck “the General Public”....... I like “the English Beat”)
-—Shoppers - like gamblers - do not usually care how much they spend (lose) over time - so long as they occasionally get the thrill of a low sale price or jackpot. While lower prices every day may make more sense for a shopper’s budget - most hard core shoppers are looking more for a thrill of “saving” money - even if they end up spending more overall.-—
THAT makes sense. TY.
A person sitting at the slot machines steadily losing money doesn't remember the fact that over the last week they spent hours of their time and over $1000 - they remember the ten minutes of absolute joy when the machine gave them $400 of their money back.
They are still out all that time - and $600 - but that thrill of winning that $400 jackpot was, apparently, worth every penny.
Shopper psychology is similar. Doesn't matter that overall you spent more at the store with “sales” for the same items - what matters is that you “SAVED” 50% on one of the items!!!
I think it is the same thing. You choose to pay a (sometimes rather steep) annual fee to hold an American Express card. I fail to see how that is less proactive than shopping at a store. Seems like the same thing to me.
And granted, I don’t like a lot of TV shows that JC Penney would target, and I do watch a lot of TV shows that Amex would target, but I saw that stupid Ellen/Amex commercial with the animals at least a hundred times, and I’ve not seen the Ellen/JC Penney commercials at all. How frequently are these ads aired?
You summed it up nicely.
Thanks!
Gotta call em’ like I see em’. ;)
——what matters is that you “SAVED” 50% on one of the items!!!-——
Like I sometimes say to my wife, “the more you buy, the more you save.” Sometimes I like to irritate her for no apparent reason. 8-)
Of course JCP can’t compete on price with WM, but its not trying to. On the same token, you won’t find the better brands and quality at WM that JCP has either.
THere is overlap obviously, but you can’t walk into a wal mart and find everything you find at JCP and vice versa.
JCP is a mall department store, WM is a cattle call box store.
We’ll see if this guys vision works, me personally I’d rather know if I go into JCP, I am getting a good price, not worry about having coupons or sales. Though I am not their primary customer either.
20% drop hurts, but major changes take time, is this sort term pain to adjust for better long term? Or is it just a massive screw up? Time will tell.
In an economy like today’s, pushing a divisive social issue is a really bad idea. Especially for an already-struggling retailer where every sale matters. It’s better to simply stay neutral and avoid alienating customers.
I used to tell my wife “You are going to “Save” us right into the poor house!”.
But she was spending her own money - often on me - so I really didn’t care too much.
It was mostly a joke because she would come to me trying to justify her purchases - as if I cared. So I acted like I cared that she “saved” money on this or on that - and “only” spent $500 - or that she just got $200 for old clothes she sold on consignment.
But I could tell how much she was pleased (like a gambler) by the fiction that she “saved” something - got a real big score - BWANA BIG SHOPPER bring back BOO COUP big SALE - tribe feast well tonight!
Maybe my devil may care attitude was brought about somewhat by the fact that (not only was it her own money) she would put on a “fashion show” of the new clothes she bought - or my favorite - new shoes - because she would model those wearing ONLY the shoes!
Good times!
Johnson came from the alternative universe of Apple. This explains a lot.
Liberals are basically psychopaths who adore themselves and who are under the illusion they are amorally and intellectually superior to the majority - Penny’s customer base.
The liberal authoritarian personality and it’s pack of politically correct lies works amongst liberals or a captive audience - consumer base - like Apple. Normal people walk away from it because it is basically insane and offers no value in the real world where they exist. People like Johnson gets his rocks off sticking his fingers in the eyes of the kind of people who shop at JC Penny’s.
Don't you love these liberals? According to him, the problem can't be that their customers are rejecting his policy changes, they are just to dumb to understand them.
In Houston you can spend 30 minutes walking through a JC Penney and not hear English being spoken once, from the customers or the sales associates.
Their “everyday low price” scheme was bound to fail for this clientele.
I remember when they had wire baskets on overhead trollies.
Nice. How do I suggest that one to my wife without sounding like I've been hanging out on some creepy pervo website?
Wow.
Say “Why don’t you model those shoes for me - JUST the shoes! ;)”
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