J.C. Penney sales plunge amid 'bumpy transition'
J.C. Penney has settled in a class action lawsuit alleging it tricked customers into thinking they were getting a discount.
J.C. Penney had another tough quarter. Sales were down 28 percent -- more than half a billion dollars.
When Ron Johnson became J.C. Penny’s CEO, in 2011, he crunched the numbers.
“And his argument was,'This is ridiculous,’” says Jean-Pierre Dubé, professor of marketing at the University of Chicago’s Booth School of Business. “‘People are just coming for deals. What J.C. Penney needs to do is offer value.’”
So, Johnson invested in new merchandise, and built specialty boutiques in J.C. Penney stores. He also got rid of two things J.C. Penney was known for: Sales and coupons.
That backfired, and last summer, he brought some of them back.
According to Ken Homa, a marketing professor at Georgetown University’s McDonough School of Business, the retailer has sent some mixed messages.
“I think that consumers out there just have no idea what to think about J.C. Penney at this time,” he says.
Yesterday, on a conference call with investors, CEO Ron Johnson defended himself.
“I told you transformations are unpredictable and can be bumpy, and this one has been,” he said.
When Johnson started at J.C. Penney, he predicted there would be profits in a matter of months. Yesterday, he said the company’s transformation will take years.