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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsJ.C. Penney Plummets as Goldman Raises Liquidity Concerns
J.C. Penney Co. (JCP), the retailer trying to reverse $1.6 billion of losses in the past year, sank the most in almost seven months after Goldman Sachs Group Inc. said its liquidity will be strained this quarter.
The shares fell 13 percent to $10.35 at 1:11 p.m. in New York. They earlier slid as much as 17 percent for the biggest intraday drop since Feb. 28, the day the department-store chain reported the lowest annual sales since at least 1987.
Weak fundamentals, inventory rebuilding, and an underperforming home department will likely challenge J.C. Penneys liquidity levels in the third quarter, Kristen McDuffy, at New York-based analyst for Goldman, wrote yesterday in a note to clients. In order to safeguard against a potentially poor fourth-quarter holiday season, it is likely that management will look to build a bigger liquidity buffer.
McDuffy initiated J.C. Penneys debt at an underperform rating.
Since taking over in a second stint as chief executive officer in April, Mike Ullman has borrowed money to shore up the finances, and re-introduced discounts and brought back merchandise to help recover from his predecessors failed attempt to transform the company. The retailer has taken out a $2.25 billion loan, arranged by Goldman, and drawn down $850 million from its credit revolver.
more...
http://www.bloomberg.com/news/2013-09-25/j-c-penney-plummets-as-goldman-raises-liquidity-concerns.html
irisblue
(32,975 posts)not so much from my POV
Rex
(65,616 posts)in hopes of a nice meal.
SoCalDem
(103,856 posts)Sears, Penneys & Wards were tier2 stores..and their catalog sales were what made them attractive for a very long time. Their prices and good quality store-brands made them the go-to stores for millions of Moms ...
UNTIL... some company "leaders" decided that they too should carry name brands like the "fancy" department stores...and have big furniture departments, and high end cosmetics ....and that they should end catalog sales..
As more and more malls popped up everywhere, and more and more discount stores showed up, they were doomed..
Sears held on because of their tool-connection (the quality has fallen off dramatically says my husband), and their appliances (but now they carry the same stuff you can get anywhere)..
Before EVERYONE had credit cards, lower paid people could easily get those company credit cards, so they had a built-in loyalty...especially at Christmastime.
The internet & Walmart may the the last two nails in their coffin ..(Wards died long ago..)
leveymg
(36,418 posts)Welcome to the brave new world.
notadmblnd
(23,720 posts)Maybe Target will pick up Penneys
avaistheone1
(14,626 posts)Ron Johnson (formerly of Apple) as CEO.
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Bill Ackman, the hedge-fund tycoon who recruited Johnson to take over at JC Penney in 2011, and who has defended Johnson several times in the months since, recently turned on him, using the phrase something close to a disaster to describe Johnsons impact on the company.
So what did Johnson do that was so bad?
He Misread What Shoppers Want
In early 2012, Johnson announced a major overhaul of the way JC Penney does business, with a new fair and square everyday low pricing scheme to replace the fake prices used commonly in the past. The idea sounded greatin theory. Didnt everyone hate those fake prices, which were inflated only so that the inevitable discounts would seem tempting?
Well, no. Johnson thought it made sense to cut to the chase by listing realistic prices from the get-go and foregoing nonstop sales. It does make logical sense, after all. But shoppers arent purely logical creatures. Theyre often drawn to stores not by the promise of fair pricing, but by the lure of hunting for deals via coupons and price markdowns. Its all a game, and a contrived one at that. But its a game that shoppers are accustomed to playing, and that many consciously or not like playing, with the How Much You Saved line at the bottom of the receipt serving as a score.
It didnt take long for people to note that Johnsons no-coupons, no-sales experiment was failing to attract shoppers. Sales collapsed through early 2012, and by the summer, even Johnson acknowledged the stores had made a big mistake.
I thought people were just tired of coupons and all this stuff, Johnson told Businessweek. The reality is all of the couponing we did, there were a certain part of the customers that loved that. They gravitated to stores that competed that way. So our core customer, I think, was much more dependent and enjoyed coupons more than I understood.
He Didnt Test Ideas in Advance
And why didnt Johnson understand what JC Penneys core customers enjoyed? Well, one reason is that he didnt really ask them. When Johnson floated plans for the chains radical makeover, he was asked about the possibility of trying the new pricing strategies on a limited test basis. Johnson reportedly shot down the idea, responding, We didnt test at Apple.
The fact that JC Penneys longest-standing customers loved coupons and the prospect of finding steals via rounds of markdowns should have never come as a surprise to the companys CEO. Ideally, the retail chain would have also known in advance that customers found Johnsons new three-tiered simple pricing schemewhich didnt include common shopping terms like Clearance and Saleto be enormously confusing.
A continued sales slump forced Johnson to realize the error of his ways. JC Penney rolled out some half-hearted discounts on Black Friday 2012, which were deemed to be mostly underwhelming compared to 80% off deals in other stores. He flip-flopped on use of the word sale as well; in the companys brochure for Presidents Day weekend, the word sale was used 37 times over 24 pages of merchandise. Even that proved to be confusing, because in stores JC Penney was listing phony manufacturers suggested retail prices that no store ever charged.
He Alienated Core Customers
As Johnson removed their beloved coupons and sales and increasingly focused on making JC Penney a hip destination shopping experience complete with boutique stores within the larger store, many of the chains oldest and most loyal customers understandably felt like they were no longer JC Penneys target market. The return of sales hasnt proved to bring about a return of these shoppers.
Theres no reason to try and alienate customers who want to try and shop at J.C. Penney, Myron Mike Ullman told the Wall Street Journal after news broke that Johnson was out as CEO. Ullman is taking over as CEO, a post he held before Johnson was brought in to save the company. Yes, JC Penney has reinserted the executive who was in charge at the time the chain was struggling mightily, and seen to be in need of a radical overhaul. Ullman doesnt envision a complete return to pre-Johnson policies, however. I wouldnt recommend that we go back to the way J.C. Penney was when I left. Things change.
He Totally Misread the JC Penney Brand
Johnson pictured coffee bars and rows of boutiques inside JC Penney stores. He wanted a bazaar-like feel to the shopping experience, and for JC Penney to be Americas favorite place to shop. He thought that people would show up in stores because they were fun places to hang out, and that they would buy things listed at full-but-fair price.
But early and often during the Johnson era, critics pointed out that JC Penney was not the Apple Store. The latter features cutting edge consumer tech that shoppers have grown accustomed to purchasing at full price. JC Penney, on the other hand, is stuck with a reputation as the place your mom dragged you to buy clothes you hated in 1984, as a Consumerist post put it. The idea that people would show up at JC Penney just to hang out, and that its old-fashioned shoppers would be comfortable with Johnsons radical plans like the removal of checkout counters almost seems delusional.
Overall, He Didnt Seem to Like or Respect JC Penney
In retrospect, Johnson and JC Penney seem like a horrible match. All along, Johnson insisted that he absolutely adored the venerable JC Penney brand. But if he loved it so much, why was he so hell bent on dramatically changing it, rather than tweaking and gently reshaping as needed?
In late February, the Wall Street Journal quoted JC Penney COO Michael Kramer voicing his distaste for the company as it was before Johnson took over. I hated the J.C. Penney culture. It was pathetic, Kramer said.
Like Johnson, Kramer is also a veteran of the Apple Store. And while Johnson was never quoted saying anything like that about the companys culture, his actions demonstrate that he didnt have much respect for the way things used to be done.
Whats more, Johnson seemed to have a disdain for JC Penneys traditional customer base. When shoppers werent reacting positively to the disappearance of coupons and sales, Johnson didnt blame the new policies. Instead, he offered the arrogant assessment that customers needed to be educated as to how the new pricing strategy worked. He also likened the coupons beloved by so many core shoppers as drugs that customers needed to be weaned off.
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Read more: http://business.time.com/2013/04/09/the-5-big-mistakes-that-led-to-ron-johnsons-ouster-at-jc-penney/#ixzz2fw5I7QUA
notadmblnd
(23,720 posts)when our jobs have either been off shored or cut to below living wages? Did they think the Chinese would buy their stuff?
lpbk2713
(42,757 posts)And I know I don't miss them. The whole concept has faded away IMO.
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