J.C. Penney Reports Worse Than Expected Third Quarter Loss

JCPenneyBy ANNE D'INNOCENZIO

NEW YORK -- J.C. Penney (JCP) reported a bigger-than-expected loss in the third quarter on plummeting sales as customers continue to reject its move get rid of blockbuster sales in favor of everyday low pricing.

Friday's report marks the third consecutive quarter of losses and steep sales declines since the mid-priced department store chain get rid of hundreds of sales it used to offer each year and instead cut prices permanently about 40 percent throughout the store. It's a big blow to Penney, which has suffered in recent years as it's failed to keep its stores fresh and its core middle-income shoppers have been hard hit by the weak economy.

The results underscore the challenges Penney's CEO Ron Johnson, the former Apple executive who came on board a year ago, faces as he tries to change the behavior of shoppers who have grown accustomed in to seeing sales signs of up to 70 percent off. Under Johnson, Penney has been changing everything from its merchandise to its stores. But the centerpiece of his strategy has been to tweak pricing, with the goal of weaning deal-addicted customers off of the kind of heavy discounting that eats away at a retailer's profits.

But customers have not embraced Penney's pricing plan, which it rolled out on Feb. 1. The company has reported mounting losses and sales declines. Investors have sent its shares down nearly 40 percent this year. And critics are questioning whether the chain will ever regain its footing.

Penney, which has acknowledged that it made some mistakes, has done some tweaking. The Plano, Tex.-based company made some adjustments to its pricing in August, just six months after it rolled the plan out. And the company has been changing its advertising to better communicate the plan to customers.

The retailer also has been remaking its stores. It's adding 10 mini-shops with various designers within in stores. The company plans to add 100 shops inside 700 of its 1,100 stores by late 2014. The remaining 400 stores are in small towns and won't feature the full makeover.

Surrounding those shops will be extra-wide aisles that Johnson calls "streets." Along those pathways will be ice cream and coffee bars and wood tables with built-in iPad tablet computers shoppers can use. In the middle of it all, a Town Square will offer activities like Pilates.

Johnson said in September that he's encouraged by sales at the new shops, which are faring better than the rest of the stores.

But Penney still has a long way to go toward revamping its business. The chain said Friday that it lost 56 cents per share, or $123 million in the quarter ended Oct. 27. That compares with a loss of $143 million, or 67 cents per share, in the year ago period. Revenue dropped 26.6 percent to $2.93 billion in the quarter.

Analysts had expected a 15 cent loss on revenue of $3.27 billion.

Revenue at stores opened at least a year dropped 26.1 percent. Analysts expected a 17.6 percent drop. During the first quarter, that measure dropped 18.9 percent, while during the second quarter, it fell 21.7 percent.

On the news of the poor results, Penney shares fell $1.59, or 7.3 percent, to $20.10 in premarket trading on Friday.








Increase your money and finance knowledge from home

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

Investing in Emerging Markets

Learn to invest in a globalized world.

View Course »

Add a Comment

*0 / 3000 Character Maximum

184 Comments

Filter by:
mikethompsoned

Coffee, ice cream, and pilates. What's next, meditation. This store is turning into yuppie nirvana.

November 22 2012 at 9:31 AM Report abuse rate up rate down Reply
Mary

Ron open your eys and ears a listen to the people we want labels like ST JOhns Bay Haggar Worthing back as well as our coupons and sales back then you will see the customers return to JCP Your low price strategy is not working and by the way your pricing is not the lowest Macys has you neaten as well as Kohls i use to love shopping at Pennys but know more I prefer Macys and Lord and Taylor

November 16 2012 at 9:53 PM Report abuse rate up rate down Reply
msherer260

Another pure example of how companies are at the mercey of their CEOs. JCP is such a joke, does this CEO have a glue what he is doing? Someone sit this CEO down and show him the last 6 years of Supervalus reports another company to good to listen to customers and employees going under. Such a crime that only Walmart understands when economy is bad PRICE is number one in customers minds. All you can say is, like Supervalu, JCP will have some nice looking stores to close down.

November 12 2012 at 12:36 AM Report abuse rate up rate down Reply
Glenda

Please fire this CEO. He has destroyed JC Penney's. Don't give him his Golden Parachute and use that money to go back to the JC Penney's they we all loved.

November 11 2012 at 3:20 PM Report abuse rate up rate down Reply
Dawn

I was a loyal shopper at JC Penney but over the past year I have bought very little due to the changes made by the new CEO. I have not been able to find anything I liked in the store on recent rips there so I have just stopped looking. The merchandise is very limited and when I asked a salesperson about a certain pair of jeans I had seen she told me she could look online and order them for me. If I wanted to buy them onlione I would have stayed home in front of my computer and saved the ga going to the store. I wanted to try them on and see how they loked before I bought them but since the stock was so limited I walked down the hall in the mall to Macy's where they had a much larger selection. The good news for me is that the balance I carried on my JC Penney card is rapidly decling due to lack of use!

November 10 2012 at 2:13 PM Report abuse rate up rate down Reply
speedvis

First of all it isn't just the pricing, they got rid of a lot of brands that were good sellers.. the second is, we don't need an apple laced street in the stores.. stupid concept. If he wanted apples so much he should have stayed there. Not to mention who wants to do pilates in the middle of a clothing store.. we are shopping for clothes not ice cream and apple products.. stupid plans.

November 10 2012 at 1:39 PM Report abuse +2 rate up rate down Reply
pacifichvacdepot

I do not like the new JCPENNY. It Sucks. I have been a JC PENNY customer for 40 years. Since this new CEO came in, everything went down hill. This is not an apple store, mind you. The quality of the clothing is bad. The colors, the styles are bad. The service is bad. Everything is bad. I recently went into JC Penny to buy a simple pair of Black Levis or anything Black Jeans. I did not find them!!! We need a designer / business person to take over this store, not a washed up Apple Exec! These Ex Apple Execs think they can walk into any business and change it. For one, they don't have Mr. Jobs directing them any longer so they have this false sense of direction, that they can do the job. This is not electronics, this is fashion. The two do not mix. I feel sorry for JC Penny for choosing this guy, as this guy sold himself as a self proclaimed Mr. Fix It. JC Penny picked the wrong guy. I am seeing a lot of ex apple employees go on their own and market their product as if it were an IPOD. NO NO NO. Different products require a different way of marketing. JC PENNY, Fire this guy, get him out as fast as you can and focus on a Fashion/Business person NOW. I will hang on.... I am loyal to JC PENNY but do not shop there any longer for clothes.

November 10 2012 at 1:31 PM Report abuse +3 rate up rate down Reply
Ken Smith

They drove thousands away with their overly pro homosexual agenda

November 10 2012 at 1:29 PM Report abuse rate up rate down Reply
Bill Wendt

If I want coffee and ice cream I definitely won't purchase it at Pennys. This clown just does not get it,does he?

November 10 2012 at 1:02 PM Report abuse +1 rate up rate down Reply
created14u2

If they had any brains at all, the would know what to do to bring sales back the way they were.

November 10 2012 at 12:39 PM Report abuse rate up rate down Reply