...J.C. Penney’s Real Problem: The Shrinking Middle Class * Rita McGrath April 12, 2013 Ron Johnson’s office seat has barely cooled off following his departure as business observers everywhere dissect what went so dreadfully wrong at J.C. Penney. The former Apple executive was too Silicon Valley for the Plano, Texas, retailer. He was arrogant. He didn’t test his ideas, maintaining the Apple mantra that customers don’t know what they want until you show it to them. He approved marketing campaigns that told loyal Penney’s shoppers that “you deserve to look better,” basically telling them that they looked less than glamorous wearing the brand they had trusted and been comfortable with for years. He hoarded information so that individual store merchandisers didn’t know how various lines were performing. He mocked J.C. Penney’s ways of doing things. He abandoned the discounting customers had come to expect from retailers. And he, and most of the team he recruited, were commuter leaders, jetting back to California after cramming in marathon work sessions at headquarters. These factors certainly couldn’t have helped. I think, however, there’s one major reason behind J.C. Penney’s sudden swoon that not enough commentators are picking up on. There’s one big reason JCP would never be “Bloomingdale’s for the mass market,” as Johnson wanted it to be, and that’s because the mass market is gone. Because the middle class is gone, or at least rapidly going. This reflects a troubling development...
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...Financial Analysis of Jc Penny A brief overview of the rebrand Financial Analysis of Jc Penny A brief overview of the rebrand History J.C. Penney Company, Inc has about 1,100 stores in all 50 states. J.C. Penney Company, Inc. (JCPenney) is the second largest department store in the United States behind Sears Roebuck. JCPenneys’ name came from James Cash Penney who started his first retail store in 1902 in Kemmerer, Wyoming, a small mining town when his was 26 years old called Golden Rule. Even though the local banker cautioned Penney against opening a "cash only" store, since three other previous investor attempts failed, Penney still proceeded. In Penney's 1st year, the store successfully made $28,898 in sales. By 1913, Penney changed the company’s name to J.C. Penney Company, Inc. and moved the corporate headquarters to New York City to be closer to manufacturers and suppliers. Private label brands were a major reason for the success of the company; JC Penney could determine the price and used this to increase his profit margin. Some private label examples include Belle Isle, Ramona, and Honor Brand. In 1929 the company was listed on the New York Stock Exchange. When the Great Depression hit, the company cut back its inventory and purchased goods at lower prices so it could pass the savings on to customers. The company's profits even increased during the Depression and the number of stores grew to 1,496. During World War II, Materials and merchandise were scarce...
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...The core opportunity for JCPenney is to improve its omni channel, which includes improving its brick-and-mortar locations, and ecommerce website as a way to increase sales, and customer traffic within their company. Improving their omni channel will allow them to expand their target market, as well. JCPenney’s target market is mainly targeted to millennials moms. In the past, JCPenney has expanded their women's section, which was a way to increase sales within their company. JCPenney should really expand their business, by attracting a new audience to their company, which will increase more customer traffic, and it will boost company sales. So, I recommended that JCPenney should expand their social media presence to attract more of the younger...
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... 12 Trading Area & Site Selection 13 Store Layout & Design 14 Retail Strategic Plan Controllable & Uncontrollable Variables 18 Global Retailing 20 Positioning & Differentiation 20 Strategic Direction 21 Executive Summary 22 Appendices & References 24 In 1902 founder and one time CEO James Cash Penney opened a small dry goods store in Kemmerer, Wyoming named The Golden Rule. 110 years later this once small business manager grew a company we now know as JCPenney, which has flourished into a nationwide retail department store with over 1100 store locations throughout the United States. Throughout the years JCPenney has changed an adapted to the retail market. It wasn’t till the suburban boom of the 1950’s or the post WW2 era that JCPenney became relevant as the department store we know it as today. It was at this time that JCPenney began to run national advertisements and adopted its discounted goods strategy. During these years James Cash Penney held on to his humble beginnings and incorporated his standing on customer service and daily operations. The key...
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...History of J.C. Penney and Target By Rebecca Raschke J.C. Penney James Cash Penney and two partners opened the Golden Rule dry-goods store in 1902 in Kemmerer, Wyoming. The following two years they opened another two stores in other parts of Wyoming. In 1907, Penney bought out his two partners and took on new ones. By that time Penney had 34 stores and had $2 million in sales. The firm was incorporated in 1913 as the J.C. Penney Company Corporation. The company moved headquarters to New York City the following year and in 1915 stores had opened in Mississippi and Wisconsin. In 1917 Penney became chairman of the board and had opened 175 stores and Earl Sams became president of the company. As Penney became wealthier so did his charity. In 1923 he founded Penney Farms in Northern Florida for struggling farmers. In 1925 J.C. Penney Foundation was established and the company had grown to 674 stores and over $91 million in sales. In 1927 J.C. Penney became a publicly traded corporation listed in the New York Stock Exchange. In 1929 J.C. Penney increased its stores to 1,392. When the Great Depression hit the company coped by cutting back on inventory and by purchasing everything on a bargain so the savings could be passed onto the customers. Penney was so well established that people turned to J.C. Penney for their basic items and that is how the company made it through the hard times and even increased sales during the depression. By 1936 sales rose to $250 million and stores...
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...Kohl's Earnings per Share of Common Stock (basic - common)As given in the income statement Current Ratio J.C. Penney $3.67 Current assets Current liabilities $5,645 $2,710 = 2.1 $13,042 $2,647 = Gross profit amount Net sales $7,032 $18,391 = 38.2% $6,960 $17,759 = Net income Net sales $1,114 $18,391 = 6.1% $389 $17,759 = Inventory Turnover Cost of goods sold Average inventory $11,359 $3,036 = 3.7 $10,799 $3,213 Days' Inventory Outstanding (DIO) 365 days Inventory turnover 365 3.7 = 98 days 365 3.4 = Accounts Receivable Turnover Net credit sales Average Net Accounts Receivable $0 $0 = #DIV/0! $0 $0 = Days' Sales Outstanding (DSO) 365 Receivable turnover ratio 0 #DIV/0! = #DIV/0! 0 #DIV/0! = Net sales Average total assets $18,391 $13,726 = 1.34 $17,759 $13,042 = Gross Profit Margin Rate of Return (Net Profit Margin) on Sales Asset Turnover Rate of Return on Total Assets (ROA) Debt Ratio Times-Interest-Earned Ratio Dividend Yield Net income Average total assets $1,114 $13,726 = 8.1% $389 $13,042 = Total liabilities Total assets $5,462 $13,564 = 40.3% $7,582 $13,042 = Net income + int expense + tax expense Interest expense $1,914 $141 = 13.6 823 231 = Dividend per share of common stock (Yahoo Finance 11/1/2013) ...
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...J.C. Penney is next in line in the retail industry to report earnings, as results will be announced tomorrow before the market opens. The Macy’s competitor has boasted positive sales growth in the past few quarters and analysts are expecting the trend to continue. While the retail industry is hurting, and Macy’s earnings were everything short of good, JCP couldn’t be happier as its outlook has a bright spot because of a larger than expected increase in sales. The retailer is nowhere what it used to be just several years ago and has been surpassing analyst expectations in 6 of the last 8 quarters, but this earnings report will plainly define the future of the company. This coming holiday season is ever important, as the Estimize Analysts are hoping to see a loss of 55 cents per share and revenue of $2.863 billion while Wall Street analysts are less optimistic, estimating a loss of 60 cents per share and revenue of $2.864 billion. When J.C. Penney announced a growth in sales of 6.4% for last quarter, investors and analysts were surprised to say the very least. Under CEO Terry Lundgren the company has been slowly digging itself out of the failures of former CEO Ron Johnson. Through a reintroduction of item promotions, the gentrification of brands carried, a partnership with Sephora, an advanced online shopping site which employs a pick up in store feature, and a serious focus on technology, all while still closing locations, it can be said that JCP might be on the right path and...
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...STRATEGIC ALTERNATIVES In January 2012, newly appointed CEO, Ron Johnson introduced a plan to rebrand the department store chain into a 21st century retail powerhouse. Launching of the new J. C. Penney brand identity was set to occur over four years and would include a new logo, a new in-store experience featuring new and transformed brands, and most importantly, it would change the way that the company priced merchandise. Unfortunately, J. C. Penney suffered a 25% sales decline in the first year and Johnson was fired after only 17 months. Historically, J. C. Penney’s strength had been communicating the relationship between quality and value, in a way that the customer could understand. J. C. Penney lost this connection when we introduced a complicated, three-tier pricing strategy that eliminated the use of promotions and coupons. Despite research-supported ideas and the conscious rebranding efforts, we have failed to generate the urgency and excitement required to win the support of customers and employees. Poor messaging regarding the rebranding, paired with miscommunication between the company and our customers, has left us in a major financial bind and business crisis. With the reinstatement of former CEO, Mike Ullman, we find ourselves at a strategic crossroad and the Board of Directors has made the decision to explore and evaluate strategic alternatives. We are soliciting your expert advice in creating a more cohesive image through one of the following approaches: ...
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...If you like the styles of JCPenney curtains, you'll love Amazon's collection. We have a variety of curtains in styles for every room in the home. With our inexpensive prices you can find wonderful curtains for any window. Choosing the right curtain style is simply a matter of choosing something that coordinates with your decorating style and meets the needs of the room. For example, in a room where you want sunlight to be allowed in, sheer panels are a wonderful choice. Solid panels will block the sun better. Room darkening, or blackout style curtains will keep the room dark. If you work nights, and sleep during the day, these are perfect for you. As with JCPenney window curtains, these styles of curtains are easy to hang and easy to care...
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...the J.C. Penney was incorporated. It started out with 34 stores and 20 shareholders (Elizabeth, 2010). The shareholders were store managers, former partners, Mr. Penney as the president and major shareholder. JC Penney became a public traded listed company on the New York Stock Exchange in 1927 (Encyclopedia Britannica, Inc, 2012).The headquarter is located in Plano, TX, and operates in the United States and Puerto Rico, with more than 1,100 stores and counting. JCPenney merchandises include Women’s, Kid’s, Home, Shoes, Men’s Clothing, and Bed & Bath. My role is an organization consultant. I will provide new idea to JCPenney on how they can become more profitable to consumers again. To improve sales and their image, JC Penny close their catalog business, outlet stores, exit the drug store business, and closed under-performing stores (Booten, 2011). With this reformation, many people were laid off. Problem Statement JCPenny had set the top company priority as making sales for the quarter. With downsizing, JCPenney changed their image and logos. Figure 1 display the logos for JC Penney over the years. The problem that JC Penny is facing is consumer spending. The majority of their customers were middle-class American who lost their job in the Recession of 2009. With most companies, JC Penny did not change with the time. It was struck in their old ways of during business. As a major...
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...Case Analysis 1: Sara Lee vs Dell vs JCPenney With the advance of technology and the development of society, the competition in industry is increasing intense. If there is no any innovation and just standstill for a company, it will be out of business quickly and be replaced by other competitors. Under this condition, every company wants to make wise strategy to gain profits and strength their competitiveness in the industry. Information technology plays an important role when companies develop strategy. Overview of the problems each company is facing For Sara Lee Bakery Group (SLBG), they delivered fresh-baked goods to their retailers directly. The delivery people needed to count at the retailer’s back door. But, these retailers wanted to reduce labor cost, they reduced the number of hours their back door is open. So, for SLBG, they need more trucks, more time to accommodate the limited door open time. Obviously, it will increase large amount of cost to do this. For Dell, Dell has a short delivery cycle after received customer’s order. Dell has a demand-pull value chain and it could decrease cost by not make too much computer ahead of schedule. However, HP’s local store availability and develops a number of unique features that are highly demanded by customers help HP to fight Dell for the top position successfully. For JCPenney, there was about 10% money they spend, half billion dollar goes transaction. The CEO of JCPenney thought this part of money could use to develop...
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...Retail Giants: JCPenney vs. Target Kelly Greenwood October 2, 2011 Columbia College JCPenney: History In business since April 1902, when James Cash Penney opened “The Golden Rule, a dry good and clothing store in Kemmerer, Wyoming. Although the name of the store was changed to JCPenney, in 1907, the company’s “Golden Rule” philosophy (do unto others as you would have them do unto you) remains unchanged. In 1927, JCPenney was listed on the NY Stock Exchange. Currently, JCPenney operates 1,108 department stores thoughout the U.S. and Puerto Rico, providing 112 million square feet of selling space. JCPenney offers private, exclusive and national brands. Its private brands are “developed, designed and sourced in-house, generating nearly 50 percent of the Company’s annual revenue.” (JCPenney, 2011) JCPenney has partnered with Sephora, Call It Spring™, MNG by Mango® and Modern Bride® to create a boutique style shopping experience within the JCPenney store. JCPenney “sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products and home furnishings. It also provides various services, such as styling salon, optical, portrait photography, and custom decorating.” (Yahoo Finance, 2011) It hosts one of the largest apparel and home furnishings e-commerce sites, posting revenues in excess of $1.5 billion in 2010. JCPenney posted approximately $17.8 billion in total revenues in 2010. “JCPenney has a balance of both mall-based and off-mall stores. Productivity...
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...Strategic Plan STR/581 Strategic Plan James Cash Penney started JCPenney, now known as JCP, 110 years ago. Penney aspired to be a lawyer for his family was not really well-off. His father was a Baptist minister and a farmer. He never had an opportunity to start in law school due to educational expenses that his family cannot afford. He worked in a local dry goods store where he became an assistant manager in Golden Rule Store. He had the chance to acquire one-third of the venture. In five years time, that was 1907, Penney acquired that of his partners (Soylent Communications, 2012). He had a vision to establish an entity that treats people the way he wants to be treated and this is what people commonly hear as “fair and square”. His very first retail business was named Golden Rule as based on his philosophy in life coming from the words of Confucius: “treat others as you want to be treated”. JCPenney was successful in his business for long years. His venture has the capacity to be an industry leader in innovation, pricing, and marketing strategy. Way before internet was invented, JCPenney offered catalogs to showcase their products. And now, they have jcp.com and their facebook page in which they do their promotions, marketing and sales (Toy, 2012). JCPenney had difficult times in keeping a close competition with Macy’s and Dillard’s Department Store especially when there were costs hikes when sales were down. The company adopted measures to deal with its problem. There...
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...here *ONLINE ONLY: Extra 25% off select original, regular, sale and clearance-priced apparel, shoes, accessories, fine jewelry and home purchases of $100 or more with your JCPenney Credit Card. Extra 20% off select original, regular, sale and clearance-priced apparel, shoes, accessories, fine jewelry and home purchases of $100 or more, or extra 15% off purchases, with any other method of payment. Extra 10% off select original, regular, sale and clearance-priced purchases of watches, furniture, mattress and custom blinds & shades purchases with any method of payment. Offers good at jcp.com only, excluding taxes and shipping charges, 2pm-11:59pm CST, 11/28/14. JCPenney Credit Card must be used to get the 25% off JCPenney credit offer discount. Credit offers subject to credit approval. IN STORE ONLY: Extra 20% off select original, regular, sale and clearance-priced apparel, shoes, accessories, fine jewelry and home purchases with your JCPenney Credit Card, or extra 15% off with any other method of payment. Extra 10% off select original, regular, sale and clearance-priced purchases of watches, furniture, mattresses and custom blinds and shades with any method of payment. Offers good in store only, excluding taxes, from 2pm-store close, 11/28/14. JCPenney Credit Card must be used to get the 20% off JCPenney credit offer discount. Credit offer subject to credit approval. Does not apply to Best Value, Levi's, Disney Shop, Assets Red Hot Label by Spanx, Licensed Team Sports Merchandise...
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...and meets the accepted standards for the degree of MASTER OF SCIENCE SUPERVISORY COMMITTEE: Linda Manikowske Chair Holly Bastow-Shoop Jaeha Lee Gerry Macintosh Approved: 04-24-2012 Date Holly Bastow-Shoop Department Chair ABSTRACT The JCPenney Company has undergone a transition from a value retailer to a streamlined, customer-driven retailer in order to set itself apart from its biggest competitors, Macy’s and Kohl’s. Previously, JCP was focused on general, storewide promotions. Currently, JCP has retooled their image to reflect a standard set of prices and special savings. In this exploratory look at JCP’s merchandising strategy, both previous and new methods are examined and additional steps to improve the returns on merchandising investments are offered. During this study, a detailed examination of JCP’s internal and external environments has been conducted, and an analysis of their consumer trends is presented. Suggestions for improvement in product strategy include the limited expansion of current on-trend or high fashion brands, as well as the acquisition of limited partnerships with new brands. In addition, collaborations with cosmetics and electronics during key shopping dates would benefit the existing infrastructure at JCPenney. iii DEDICATION Thank...
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