Is it now or never for J.C. Penney?
What a difference a year makes. Around this time last year, then J.C. Penney CEO Marvin Ellison was touting the department store’s success in turning its business around coming off a holiday season during which the chain delivered same-store gains of 3.4 percent.
Penney’s story is not nearly as cheery this year.
The retailer announced that its same-store sales fell 5.4 percent during the nine weeks ending Jan. 5, despite operating in one of the strongest markets in recent years. Further, one of its most direct competitors, Sears, bled business to the point that it is now, perhaps, just days away from beginning to shutter all its stores. There’s a bah-humbug for you if there ever was one.
So, the simple question for Penney and its relatively new CEO, Jill Soltau, is what to do?
Ms. Soltau certainly knew that she had a big task in turning the company around when she took over the top job last October. For one, while Mr. Ellison may once have praised the job that he and his team achieved as “one of the greatest financial turnarounds in retail history,” he still unceremoniously bailed on Penney last May when Lowe’s came calling. Ms. Soltau also has to deal with a debt load of around $4 billion, most of which comes due between now and 2025.
When Ms. Soltau took over, she said she would take some time to get understand the business and the team she had to work with. It appears that after watching revenues go south over the holidays, she is prepared to act. One of the first steps was an announcement on Tuesday that Penney is in the initial steps of closing three underperforming stores this spring. Penney also announced that information related to future (perhaps, additional?) store closings would be made on Feb. 28 when the company reports its fourth quarter and full-year earnings.
Penney currently operates 860 stores. One lament of Mr. Ellison’s following his departure from the department store chain was that he didn’t act more quickly and decisively in closing many more locations than he did while at Penney.
- JCPenney Reports Holiday Sales Update and Reaffirms Expectation to Deliver Positive Free Cash Flow in Fiscal 2018 – J.C. Penney Company, Inc.
- Can a new CEO revitalize J.C. Penney’s business? – RetailWire
- J.C. Penney is feeling merry about its Christmas performance – RetailWire
- Has J.C. Penney pulled off ‘one of the greatest financial turnarounds in retail history’? – RetailWire
- Ellison won’t repeat Penney mistake, slams door on Orchard Supply Hardware – RetailWire
DISCUSSION QUESTIONS: Do you have a sense that J.C. Penney needs to do something big — and quickly — to avoid the fate of other failed retailers? What would be your recommendations to Jill Soltau on how to fix J.C. Penney?