A Sept. 10 headline on businessinside.com proclaimed, “Investors Not Impressed with JCPenney Haircuts.”
At first I was thinking that surely, as investors, they could afford more upscale stylists. I mean, you get what you pay for.
Then I realized the title referred to the chain’s latest “innovation” in which it was actually bringing back something it had done before – offering free haircuts for kids.
Déjà vu all over again.
Earlier in the year, I blogged about the company’s huge and overly loud announcement regarding its intent to revolutionize retail with “straightforward pricing.” The promise was that they would offer no confusing sales, rather, month-long promotions “in sync with the rhythm of [shoppers’] lives” and “best prices” that are reserved for the 1st and 3rd Fridays of every month (while supplies last). Oh, and it recently had a “clearance,” which is not so much a sale as it is, well, offering merchandise lower prices. I think.
Apparently, it all made as much sense to other consumers as it did me, and we’ve stayed aware in droves. This phenomenon led its new CEO to announce plans to “simplify pricing,” while transforming its stores into mini-malls of “shops” a la Target.
As near as I can tell, this latest announcement has been more low-key, with only an insert in the local newspaper to alert me to the availability in those “shops” of value-priced apparel, such as snap-on vests for toddlers.
Some analysts see Penney’s past six months of sea changes as examples of the genius of its CEO, who came from Apple, Inc. Others see it as an exercise in grabbing at straws, hoping to stay afloat.
It will be interesting to see if this softer opening works better than the blaring trumpets. Either way, there are lessons to be learned here about confidence in concepts and managing expectations – your own, as well as your customers.
I hate to beat a dead horse (although it does take less effort)
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What’s the big news this morning about JCPenney Co. Inc. (NYSE: JCP)? That the struggling retailer has extended its free haircuts for kids promotion. But investors do not seem to be impressed, as shares are lower in early trading, along with the broader markets.
As we said earlier this morning, this free haircuts promotion is just another smoke-and-mirrors effort to regain customers since Ron Johnson joined as chief executive after a stint as head of retail at Apple Inc. (NASDAQ: AAPL). Johnson revamped merchandise pricing almost immediately after his appointment, but sales at JCPenney dropped more than 20% in the first reported quarter afterward.
Despite its lack of success, Johnson trumpeted a modified version of the plan again less than a month ago when the company released more bad earnings:
“We have now completed the first six months of our transformation and while business continues to be softer than anticipated, we are confident the transformation of jcpenney is on track. The transition from a highly promotional business model to one based on everyday value will take time and we will stay the course,” said jcpenney CEO Ron Johnson. “This month we simplified our pricing, launched the first of our new shops, and accelerated our marketing efforts to focus on brands, products and value. Early response to these efforts has been very encouraging.”
The quarterly numbers gave no support for the success of any transformation.
However, August saw a sudden surge in insider buying after four years. A director and CFO Michael Kramer cumulatively bought more than 7,200 shares, worth more than $170,000, either to take advantage of the company’s good valuations or as a way to help restore investor trust in the company’s prospects.
Still, the view from here is that the fact that free haircuts are considered a big deal at JCPenney is just another sign of how much the retailer is grasping at straws.
After opening at $28.54, shares were down as far as $28.16 in early trading. The 52-week range is $19.06 to $43.18, and the share price is more than 24% lower than six months ago.
Read more: Investors Not Impressed with JCPenney Haircuts – 24/7 Wall St.