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JCPenney Performance Poops Out


Is anybody here?

JCPenney’s tailspin continues. And there’s little sign of recovery on the horizon.

The company announced fourth-quarter earnings announcement yesterday.

JCP declared an adjusted loss per share of $1.95, way below the per-share loss of $0.24 predicted by analysts.

Revenue in the fiscal fourth quarter, which includes the main holiday shopping period, slid 28% to $3.88 billion as sales at stores open at least a year fell 32%. Analysts estimated revenue of $4.08 billion, on average.

J.C. Penney has been trying hard to reinvent its brand under CEO Ron Johnson, who is pinning hopes on its transformation strategy that includes a new marketing plan, focus on coupons and clearance sales, as well as updated merchandise.

Johnson has said his transformation of the company, presented to investors last January, would take four years.

That flat-out is not going to happen. JCPenney does not have enough gas in the tank to last another 3 years with these kind of results.

And Johnson cannot continue to corporate-speak around the facts with statements like, “Sales and customer traffic were below our expectations in 2012, but as we execute our ambitious transformation plan, we are pleased with the great strides we made to improve JCPenney`s cost structure, technology platforms and the overall customer experience.  We have accomplished so much in the last twelve months.  We believe the bold actions taken in 2012 will materially improve the Company`s long-term growth and profitability.”

Turnarounds are messy. They can be expensive. Turnarounds test leadership to the max.

For turnarounds to succeed, especially those that are both ambitious and transformational, it is imperative that positive signals come from the ashes. After more than a year – positivity is yet to be seen with JCPenney’s turnaround.

If current performance continues unchecked JCPenney will be a penny stock. And that will be a shame.

2 Comments leave one →
  1. 02/28/2013 8:29 am

    Nice post, Rick.

    JCP needs to answer one simple question: “What can I get from you that I can’t get anywhere else?” Until they do and articulate the answer both clearly and creatively, success will continue to elude them.

    • 02/28/2013 3:08 pm

      Spot on, Harvey.

      That’s why I found their current pitch of spots where everything is the same…same fit, same comfort yada yada yada (except the price, of course) to be stunningly off target.

      Ad Age says ad spending is up 14% to $504M. Not exactly getting a blip for the buck.

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