J.C. Penney tweaks pricing strategy again
In one TV spot, for instance, a dog continuously jumps through a hula hoop that a young girl is holding. The text reads: “No more jumping through hoops. No coupon clipping. No door busting. Just great prices from the start.”
“In some ways marketing during the first six months entertained versus educated,” Johnson said. Now, “the most important thing is to educate consumers on the price changes and make sure the core customer understands J.C. Penney still has products they love, at exceptional value, every day.”
The first sign that Penney’s pricing strategy wasn’t resonating with customers came in May when Macy’s CFO Karen Hoguet told analysts that sales were rising at her company’s stores that share malls with Penney stores.
A week later, J.C. Penney Co. reported that it lost $163 million, or 75 cents a share, in the three months ended April 28, compared with a profit of $64 million, or 28 cents a share, a year earlier. Revenue dropped 20 percent to $3.15 billion for the quarter as customer traffic slipped 10 percent. Meanwhile, revenue at stores open at least a year — a comparison used to measure a retailer’s health — fell 18.9 percent. That’s much steeper than the 11.4 percent drop Wall Street was expecting.
A day after Penney reported the disappointing results, its stock fell 19.7 percent, or $6.57, to close at $26.75. That’s the largest percentage drop for the company since at least January 1972, when FactSet’s daily stock price records begin.
Investors, who initially sent Penney shares soaring 24 percent to about $43 after Johnson announced the pricing plan in late January, since have pushed them down about 37 percent since the beginning of the year. On Thursday, shares slipped another 33 cents to $21.67.
And earlier this month, Standard & Poor’s Ratings Services lowered the retailer’s credit rating into junk status, saying changes have yet to take hold
J.C. Penney reports second-quarter results Aug. 10.