J.C. Penney Shuffles Executive Suite Amid Plunging Sales
President is ousted in shake-up over marketing plan
Wednesday, June 20, 2012
More changes are coming to J.C. Penney's, the department store chain that began the year proudly boasting it was throwing off the past and embracing the future.
This week the retailer abruptly announced that company president Michael Francis, who had been brought in from Target Corp. to help redefine the brand, was leaving after joining the company late last year.
Apple alum and CEO Ron Johnson will assume the duties of president as well as CEO. While Johnson has been the public face of the new Penney's, analysts say it was Francis who had responsibility for installing a new marketing and pricing plan, both of which have been slow to gain favor with consumers.
Off on the wrong foot
The company seemed to hit a sour note in early January when it launched an advertising campaign featuring screaming women, which alienated many of the store's customer base.
In February it rolled out its "fair and square" pricing, doing away with sales and coupons. By the time spring arrived, it was clear many of Penney's customers just didn't get the changes.
"I used to love to shop at J.C. Penney's, but that is no longer the case," Edna, of Albuquerque, N.M., wrote in a ConsumerAffairs post. "I am a woman and I can speak for a good majority of us! The pricing is not at all near a shopping deal, like we used to experience before this so called wonderful change! Just saying please change it back to our wonderful J.C. Penney's we once loved and once enjoyed the wonderful sales with coupons a woman so desires! We live for sales and coupons, what were you at the round table thinking?"
Customers get through
Apparently, enough customers like Edna spoke up that it got some attention. By early this month Johnson was telling investment analysts that the company was returning to its previous use of sales, discounts and coupons.
From all appearances Penney's changes were aimed at expanding its customer base from its traditional-value consumer to reach more upscale shoppers who frequented stores like Target, Macy's and Nordstrom. Instead, it appeared to drive away the very consumers who were supporting Penney's without pulling in new customers, or enough of them at least.
In the end Penney's bid for change proved costly. Penney's suffered a staggering $163 million loss in its fiscal first quarter. A year earlier, it had turned a $64 million profit.