JC Penney Strives to Bring Customers Back
Changing up pricing strategies is nothing new at J.C. Penney (NYSE: JCP) these days, as CEO Ron Johnson battles to bring the retailer back into good graces with scorned customers dismayed at the lack of coupons and discounts as of late.
According to The Wall Street Journal, the upcoming back-to-school season is no different, as the company works to make massive price cuts on apparel that was previously discounted for month-long specials. Rather than placing an expiration date on the deals, amounts nearing 20 or 30 percent will be permanently slashed off the price tag from now on.
While the new price points will certainly draw in customers on the hunt for specials, what cost will it have on the business itself?
"Mr. Johnson has acknowledged that vendors will feel short-term pain as the company reworks its stores and better manages its inventory," The Wall Street Journal noted Thursday morning.
As merchants feel the sting of J.C. Penney's failed "no coupon policy" exploration, Citi reports that the company is doing its best to rake money back in with the monetization of non-core real estate assets, while enticing new customers with the offer of exciting branded shop Joe Fresh.
Overcoming the sale and coupon termination (implemented in January by Ron Johnson when he first began his reign at J.C. Penney) has certainly been difficult and costly for the retailer. The company's revenue dropped by 20 percent in the first-quarter of 2012, with management expecting a similar outcome in the second earnings report of this fiscal year.
However, not all analysts have dismissed the department store as just another casualty of poor decision-making. Oppenheimer initiated coverage on J.C. Penney on Monday with an Outperform rating, citing the retailer as an attractive opportunity.
As J.C. Penney surges on to meet industry, customer and analyst expectations, it appears that this most recent price change-up will actually help the company's turnaround strategy. J.C. Penney's new plan promises to offer everyday low prices and clearance sales on select items – a promotion that customers will surely appreciate after a rocky retail year.
J.C. Penney closed Wednesday at $22, down nearly 37.5 percent year-to-date.
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