JCPenney CEO Sort of Admits Revamp Didn't Work Following $985 Million Loss

JCPenney isn't doing great following a major retail overhaul that went underway a little over a year ago. The result? Losses of $552 million in the fourth quarter and $985 million in the full year, reports WWD.
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JCPenney isn't doing great following a major retail overhaul that went underway a little over a year ago. The result? Losses of $552 million in the fourth quarter and $985 million in the full year, reports WWD.
Photo: Getty

Photo: Getty

JCPenney isn't doing great following a major retail overhaul that went underway a little over a year ago. It involved changing just about every feature of JCPenney stores, from the floor design to pricing models. The retailer installed a new shops-in-shop format, introduced a ton of designer collaborations from Joe Fresh to William Rast to, now, Marchesa, and eliminated all sales in favor of "everyday" low prices.

The result? Losses of $552 million in the fourth quarter and $985 million in the full year, reports WWD. Net loss in the three months ending on February 2 was six times worse than the same period a year ago. Net sales fell 28.4%.

“As much as we accomplished last year, we also made some big mistakes,” CEO Ron Johnson said in a conference call with analysts. “I take personal responsibility for these. Experience is making mistakes and learning from them. I have learned a lot... We worked really hard and tried many things to help the customer understand that she could shop anytime on her terms."

The major mistake Johnson admitted to is getting rid of sales--a plan he wrongly predicted would see the retailer turning a profit within the first year. Which, I mean, duh? Who doesn't love a sale? Of JCP's target customer, who is apparently always a woman, he said, "We learned she prefers a sale. At times she loves the coupon. And always, she needs a reference price.”

Moving forwards, Johnson confirmed that they have brought back sales that will be held every week, and coupons for rewards members (which will be called "gifts"). He also reminded analysts that this transformation would be "bumpy" and a "multi-year effort."

According to Johnson, it wasn't all bad and the retailer "actualized savings of $800 million" by reducing inventory and changing cost structure.

Other plans for revival include increasing mobile selling in stores (something a lot of retailers do to reduce lines) and beefing up business in the home category.

Do you think JCPenney has a chance of becoming successful or is the brand already beyond repair?