Sales are back at J.C. Penney
By Abha Bhattarai,
In January, J.C. Penney made a radical announcement: No more sales.
Eleven months later, in an effort to lure Black Friday shoppers, the beleaguered company held its first sale of the year.
“It is very much in jeopardy,” Brian Sozzi, an analyst at NBG Productions, said of the company. “I’ll be honest — I don’t see almost any chance of them having a good holiday season. It’s just about surviving the holidays.”
J.C. Penney pulled out all the stops Friday. It opened its doors at 6 a.m., selling $7 sweaters, $20 boots and $450 Dyson vacuum cleaners. The chain also offered millions of prizes to shoppers — ranging from gift cards to New York City vacations — as part of the effort to win back disenchanted customers and attract new ones.
Shea King was at the Prince George’s Plaza store Friday morning. She had picked up some jeans for her 12-year-old daughter but wasn’t sure whether she was getting a good deal.
“I’ve never been a J.C. Penney shopper,” King said. “But I was here getting my hair done, so I thought maybe I’d come look.”
Shoppers crowded around tables of $4 children’s clothing and $5 towels. Many said they hadn’t been inside a J.C. Penney store in months but wanted to check out the Black Friday markdowns.
It’s been a year of last-ditch efforts for J.C. Penney, which is based in Plano, Tex. In 2012, the company has announced partnerships with designers such as Vivienne Tam and Jenny Packham, introduced television commercials featuring Ellen DeGeneres and added jcp, a line geared toward a younger, hipper crowd. The chain offered free children’s haircuts during back-to-school season and complimentary family portraits this month.
But situation continues to decline. The company has reported losses of $513 million since February, and sales have dropped by more than 20 percent every quarter. Shares of J.C. Penney stock are trading at about half the price of a year ago.
And if the company is hoping to entice younger customers, many of those who were out shopping on Black Friday said it wasn’t working.
“I’m not interested in J.C. Penney,” said Tryphaena Williams, 22, who was waiting for her mother to check out. “It’s not my type of store.”
Ron Johnson, a former Apple executive, took over the 110-year-old company a year ago. There were hopes of a quick turnaround, but that has yet to happen.
In July, Johnson announced that he would cut 350 jobs from the company headquarters by year’s end. By 2015, he hopes to transform the traditional department store into a collection of mini-boutiques.
“The holidays are critical for them,” said Paul Swinand, an analyst at the Morningstar investment research firm in Chicago. “I think they’ve got some good tricks up their sleeves. The question is, Will the customer understand?”
J.C. Penney’s financial troubles are emblematic of a larger struggle among discount retailers, which were hit particularly hard during the economic downturn. Many are still recovering.
“The lower end of retail has been getting hammered since 2008,” Swinand said. “Gas prices, cotton prices, fiscal worries — every day we get something else. People are saying, ‘Oh, Penney’s is a disaster.’ Well, look around: Sears is down. Kohl’s is down. Wal-Mart has been flat. Target has been lackluster.”
Last year, J.C. Penney posted a 0.3 percent increase in December sales, down from a 3.7 percent increase the year before. How the company will fare next month, analysts say, remains to be seen.
At the Prince George’s Plaza store, a steady stream of customers came in Friday morning.
“It’s been really busy,” said Tim Zielinski, store manager. “When we opened at 6 a.m., there were at least 100 people waiting at the door and 300 more at the mall entrance.”
Kitchen appliances priced at $8 — including waffle makers, slow cookers and toaster ovens — sold out within five minutes, he said. A couple of hours later, tables of $10 colored jeans were empty.
“It’s at least twice as busy” as usual, Zielinski said. “It’s good to see.”
Rose Oriaku, who said she hadn’t shopped at J.C. Penney for about 10 years, was at the store Friday morning.
“I used to shop here when my kids were little, and then I moved on,” she said, adding that she stopped by because she had a gift certificate that was about to expire.
Oriaku bought a pair of boots for herself and was combing through a display of $10 jewelry. She wasn’t too impressed.
“Next I’m going to Macy’s,” she said. “That’s my store. I think their deals are better.”