JC Penney Shares Fall on Low Sales Reports

By on March 1, 2013

JC Penney shares plunged nearly 17% on February 28, after the department store announced a severe decline in quarterly sales as its transformation plan fails to connect with customers.  Both open market purchasers of JC Penney stock and employees or former employees with a retirement plan have seen their shares fall nearly 56% over the last year.

In a press release, JC Penney announced a $557 million net loss in the quarter ended February 2, compared to an $87 million loss in the same period last year.  Revenue fell 25% to $13 billion.

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Chief Executive Ron Johnson was hired in June 2011 to help boost sales for the struggling department store.  Johnson, a former Apple executive, introduced a new marketing strategy which eliminated sales, coupons and promotions, and introduced “everyday low prices” for branded merchandise.

Did you know? According to JC Penney’s Employee Retirement Plan’s 2011 Annual Report filed on Form 11-K with the S.E.C. on June 29, 2012, there was over $514 million invested in company stock.

On the conference call following the earnings release, Johnson said:

“Experience is making mistakes and learning from them, and I have learned a lot. I had a personal conviction to deliver everyday value beginning with truth on the price tag. You all know how important that is to me. We worked really hard and tried many things to help the customer understand that she could shop any time on her terms. But we learned she prefers a sale. At times, she loves a coupon. And always, she needs a reference price. Whether there’s a manufacturer suggested price on a branded item, a comparison on a private-label item, or a sale, she needs to feel she added value to her family through the savings she got from being a savvy shopper.”

JC Penney failed to provide same-store sales figures or a forecast for future earnings.