JC Penney’s poor earnings could mean slow death for retailer

February 27, 2013
February 27, 2013

The death watch for JC Penney intensified today as the ailing US retailer reported a whopping 31.7% drop in sales last quarter, which included the all-important holiday shopping season. Analysts had already predicted weak sales but the news from JC Penney was worse than expected, sending shares down by more than 10% in after market trading.

Quartz earlier contemplated whether JC Penney was one of those companies that can’t be saved and today’s news offered further proof that may be true. CEO Ron Johnson, who was hailed for his retail prowess as head of Apple stores, showed how desperate the company was by saying JC Penney will now offer sales “each and every week,” representing a total reversal from his strategy of weaning customers off of sales.

Johnson was brought in by activist investor William Ackman of Pershing Square, who took a stake in JC Penney in 2010 and hoped Johnson could turn it around with his Apple retail magic. But Johnson realized too late that one of the main reasons JC Penney customers, unlike Apple buyers, come into the store is because of sales. When he ended that incentive, and then belatedly began bringing discounts back, the customers had already left. And it looks like they are not returning.

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