J.C. Penney Co. Chief Executive Officer Ron Johnson, who took over this month after running Apple Inc. (AAPL)’s retail operations, is reviewing products, pricing and promotional strategies to help revive sales.
“I’m not here to improve, I’m here to transform,” Johnson said he told employees on his first day on the job. “I’m investing considerable energy in a strategic review,” he said on a conference call yesterday in his first public comments since starting on Nov. 1, adding he will provide further details at J.C. Penney’s investors’ meeting in January.
Johnson, 52, is taking charge as the third-largest U.S. department-store chain posted its first quarterly loss in two years amid declining revenue. Sales of basic items were weaker than last year as shoppers defer some purchases, Chairman Myron Ullman said during the call.
J.C. Penney needs “to figure out how to drive traffic,” said Paul Lejuez, an analyst at Nomura Securities International in New York who rates the shares “neutral.” The Plano, Texas- based company could potentially target younger customers by opening coffee lounges with free WiFi to attract the demographic that frequents Apple stores, he said.
Since his appointment in June, Johnson, has brought in Michael Francis, a former colleague at Target Corp. (TGT), to head marketing efforts. Yesterday, he announced the appointment of two former Apple executives as chief operating officer and chief talent officer.
The shares fell 2.8 percent to $32.98 yesterday in New York. The stock has gained 2.1 percent this year.
The net loss of $143 million, or 67 cents a share, in the fiscal third quarter ended Oct. 29 compared with profit of $44 million, or 19 cents, a year earlier, J.C. Penney said yesterday in a statement. The company had last reported a loss in the quarter ended August 2009.
The retailer forecast fourth-quarter profit of 64 cents to 74 cents a share, including restructuring charges, and $1.05 to $1.15 excluding the costs and other items. That compares with an average estimate of $1.15 for both measures from predictions compiled by Bloomberg.
Sales at stores open at least a year are expected to be unchanged or “slightly” positive, with total sales shrinking as much as 3 percent, J.C. Penney said.
The company’s forecast is “achievable and prudent, particularly to re-establish investor credibility near-term.” Matthew Boss, a JPMorgan & Co. analyst, said in a research note. He rates the shares “overweight.”
Excluding some items, third-quarter profit was 11 cents a share, matching the average of seven estimates compiled by Bloomberg.
J.C. Penney had about $265 million in charges in the quarter, including $179 million, or 51 cents a share, related to a voluntary early retirement plan. Other expenses were to dispose of the company’s outlet business, improve its supply chain and for a management transition.
Sales at stores open at least a year, considered a key performance gauge, fell 1.6 percent. Overall sales declined 4.8 percent to $4 billion after the company exited its catalog and catalog outlet businesses. The company reported the drop in sales earlier this month.
Michael Kramer was appointed chief operating officer and Daniel Walker as chief talent officer, according to statements yesterday.
Walker, 61, has worked in human resources at Apple, Gap Inc. (GPS) and General Mills Inc. (GIS) Kramer, 47, was most recently CEO at clothing maker Kellwood Co., and has also worked at Apple, The Limited and Abercrombie & Fitch Co. (ANF)
To contact the reporter on this story: Lauren Coleman-Lochner in New York at email@example.com
To contact the editor responsible for this story: Robin Ajello at firstname.lastname@example.org