JC Penney opened its first three in-store brand shops in August

JC Penney opened its first three in-store brand shops in August

Since Ron Johnson was appointed chief executive officer of department store retailer JC Penney just 18 months ago, the company has suffered a string of losses and has been forced to make a number of U-turns as it tried to make headway on its turnaround plans.

Looking at Johnson's tenure at the business, just-style lists some of the key mis-steps after his efforts to bring in a new pricing strategy, re-invent the in-store experience and a launch new brands appeared to alienate existing customers.

  • In May 2011, JC Penney posted a 6.7% increase in first-quarter profit to reach US$64m, after it was boosted by the performance of a number of exclusive and private brands. Labels including Liz Claiborne, Worthington and St John's Bay, alongside Sephora, MNG by Mango, Call It Spring and Modern Bride, sent comparable store sales up 3.8% in the three months to 30 April.
  • The company appointed Apple retail supremo Ron Johnson as its new CEO a month later, replacing Mike Ullman III from November 2011.
  • That same month JC Penney swung to a net loss of $143m in the third-quarter against a $44m profit the year before, after it was hit by restructuring charges and lower sales. Sales fell 4.8% to $3.9bn over the quarter, while comparable-store sales were down 1.6%. Meanwhile, the company brought in former Kellwood boss Michael Kramer as COO, with responsibility for finance, investor relations corporate strategy and information technology.
  • The move came just before Johnson revealed a series of initiatives designed to revamp the business, including a new pricing strategy, plans to re-invent the in-store experience, new brand identity, and new in-store shops. Its Fair and Square pricing strategy aimed to reduce the number of promotional events taking place each year.
  • JC Penney also announced plans to reduce its costs by $900m through cuts in stores, advertising and head office operations. 
  • In February last year, the retailer swung to a full-year loss of $152m from a $389m profit a year earlier after it was hit by restructuring charges, while sales fell 2.8% to $17.2bn. JC Penney later revealed there was a risk its new strategy could hit sales for some time, and that there was no guarantee its store and merchandise turnaround plan would work.
  • The company cut a further 350 jobs in July 2012 at its corporate headquarters in Plano, Texas - just three months after it said it would axe 600 headquarter jobs as part of its efforts to save $900m in costs over the next two years.
  • JC Penney opened its first three in-store brand shops in August, with nearly 700 stores being renovated to install the brands, which included Levi's, i jeans by Buffalo and The Original Arizona Jean Co.
  • That same month the group swung to a second-quarter loss of $147m, from a profit of $14m the prior year, and added that it would not meet full-year forecasts because of lower than expected sales. Total sales declined 22.6% to $3.02bn, while comparable sales dropped 21.7%.
  • Meanwhile, the department store operator launched its second wave of in-store fashion shops in September, which debuted the Liz Claiborne, Izod and the new JCP private fashion basics brand in nearly 700 US stores.
  • JC Penney CFO Ken Hannah reiterated the company's commitment to its ongoing transformation, including the implementation of its in-store shops. Speaking at the Goldman Sachs 19th Annual Global Retailing Conference in September, he described the shop strategy as the "best return" to shareholders.
  • Despite ongoing efforts to try to turnaround its business, sales continued to slide during the third quarter of last year. Sales fell 26.6% to $2.9bn, while comparable store sales were down 26.1%. But losses narrowed to $123m from $143m, helped by cost cutting and the sale of non-core assets. 
  • JC Penney confirmed in January this year that it had scaled back its RFID ambitions as part of a cost saving initiative. It added that it would continue to roll out tagging in bras, footwear, fashion jewellery and men's and women's denim.
  • And in February the group remained coy on reports it would axe another 300 jobs at its headquarters in Plano, Texas. According to local press reports, the job cuts were due in January, which Johnson decided to delay until the company's fiscal year end.
  • The department store retailer also said it was hoping to ramp up its fashion credentials with a number of new designer collaborations being launched this spring. The line-up includes the debut of Joe Fresh in nearly 700 stores, along with Pearl by Georgina Chapman of Marchesa, L'Amour Nanette Lepore, William Rast, Lulu by Lulu Guinness and Duro Olowu for jcp.
  • In the same month, JC Penney saw its fourth-quarter losses widen to $427m from $87m as sales fell 28.4% to $3.8bn and comparable store sales tumbled 31.7%. It was also forced to abandon a central part of its turnaround plan, the everyday low pricing model, after the strategy failed to gain traction with consumers. As a result, the group decided to return to a more promotional offer.