The apology from J.C. Penney Company, Inc. (NYSE:JCP)‘s in the “We’re Listening” campaign seems to be working, at least for now. Customers have been returning to stores in the wake of J.C. Penney re-opening celebrations. During the tenure of a rough year riddled with mistakes and hard-learned lessons, J.C. Penney Company, Inc. (NYSE:JCP) found that the soul of their customer was driven by super low sale prices and an enthusiasm for home and back to school shopping.
A Brief Glance Back
Although changes in management are sometimes inevitable, CEO Ron Johnson was detrimental for the J.C. Penney Company, Inc. (NYSE:JCP) brand. With a vast variety of mistakes, Ron Johnson led the company in a downward spiral, eventually resulting in his departure. Below is a timeline of this spiral:
June 14, 2011-Ron Johnson named CEO of J.C. Penney (stock at $35.40)
Feb 1, 2012- Eliminates coupons and develops new pricing model of “Everyday Low Prices” ($43.30)
June 18, 2012- CEO Micheal Francis leaves J.C. Penney ($24.30)
July 26, 2012- Johnson reintroduces the word “clearance” into their sales mix ($22.20)
Nov 9, 2012- Customer traffic falls 12% in Q3 ($20.70)
Feb 27, 2013- Same store sales fall 32% in Q4 ($21.20)
April 5- J.C. Penney backer said Johnson made “big mistakes” ($15.90)
April 8. J.C. Penney ousts CEO Ron Johnson
Back to Home
J.C. Penney Company, Inc. (NYSE:JCP) hosted a nationwide house warming event in celebration of a grand re-opening. With names like Michael Graves Design, MarthaHome, Happy Chic by Jonathan Adler, Design by Conra, BODUM, ORDNING&REDA, J.C. Penney hopes to re-attract the market that they lost during their pricing flop. One of the core brands that J.C. Penney showcased during the housewarming event is Martha Stewart Living Omnimedia, Inc. (NYSE:MSO).
Martha Stewart Living Omnimedia, Inc. (NYSE:MSO) has faced some tough battles in years past. With share prices declining 93.13% since the IPO, and EPS declining to –$0.83, it looks like the golden years are over for this home fashion mogul. Revenues declined 12.6 million for the quarter, partially due to restructuring costs and operational expenses. All properties held by Martha Stewart Living Omnimedia, Inc. (NYSE:MSO) declined, with the largest decline in Broadcasting by 4.2 million.
Unfortunately for Martha, the legal battle doesn’t end. Competitor Macy’s, Inc. (NYSE:M) claims that they exclusively hold rights to the Martha name, with claims that J.C. Penney Company, Inc. (NYSE:JCP) infringed on their property rights.
Macy’s, Inc. (NYSE:M) profited from the downfall of J.C. Penney, with sales exceeding $6.387 billion, up 4% for the quarter. Expected comparable sales are estimated to grow approximately 3.5 percent in 2013. Both Bloomingdale’s and Macy’s, Inc. (NYSE:M) exceeded expectations, leaving battered J.C. Penney Company, Inc. (NYSE:JCP) in the dust. What was the reason for this? A pricing model that drove away core customers elsewhere for household goods.
Originally, J.C. Penney had fought for the same customer that also shopped at Macy’s, Inc. (NYSE:M), along with Target Corporation (NYSE:TGT), Kohl’s Corporation (NYSE:KSS) and Dillard’s, Inc. (NYSE:DDS). This kind of customer was value driven and also appreciated quality products found at bargain prices. The psychology of coupon-cutting for bargain bin deals was at the heart of the customer that shopped at J.C. Penney Company, Inc. (NYSE:JCP). Confused by a new pricing strategy, these customers fled and bargain-shopped at other retail outlets instead, driving up profits at other stores.
The Foolish Bottom Line
Although J.C. Penney Company, Inc. (NYSE:JCP) is keeping cool through the storm, they have a lot of ground to gain with bringing back their core customer base. With the return of CEO Myron “Mike” Ullman, the tables have turned around slightly for this battled retailer. Share price has been up 14% since the former CEO took over. With first quarter results at $2.635 billion, things might be more cheerful for this apparel and home furnishing retailer.
Kaitlyn Tokay has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Is This the Future of J.C. Penney? originally appeared on Fool.com.
Kaitlyn is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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