J.C. Penney Apologizes in Ad Developed Under Former CEO

May 1 (Bloomberg) -- J.C. Penney is apologizing. The department-store chain is airing a television commercial this week -- in time for Mother’s Day -- that says it made mistakes and asks former customers to come back. Sheila Dharmarajan reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)

J.C. Penney Co. (JCP) is apologizing.

The department-store chain will air a television commercial this week -- in time for Mother’s Day -- that says it made mistakes and asks former customers to come back.

Development of the 30-second ad began a few months ago after executives reviewed customer feedback, Joey Thomas, a company spokesman, said in an e-mail. In other words, the ad originated under Ron Johnson, the former chief executive officer who alienated customers by ditching discounts and axing dozens of popular brands in favor of ones aimed at younger shoppers. Myron Ullman replaced him on April 8.

“J.C. Penney is an enormous brand with a lot of very loyal customers that said, ‘This is a different store and it’s not for you,’” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management in Evanston, Illinois. “Now they are trying to reverse this.”

The J.C. Penney ad, which also has been posted on the company’s Facebook and YouTube pages, features clips of women trying on clothes and children hugging.

“It’s no secret, recently J.C. Penney changed,” goes the voiceover. “Some changes you liked and some you didn’t, but what matters with mistakes is what we learn.

“We learned a very simple thing -- to listen to you, to hear what you need, to make your life more beautiful. Come back to J.C. Penney. We heard you.”

After Johnson implemented his makeover, sales fell 25 percent and the chain posted a net loss of $985 million in Johnson’s one full year at the Plano, Texas-based company.

J.C. Penney (JCP) declined 1.3 percent to $16.20 yesterday at the close in New York. The shares have slid 18 percent this year, compared with an 11 percent gain for the Standard & Poor’s 500 Index.

New Coke

Leading the charge to fix J.C. Penney’s brand is Sergio Zyman, the former Coca-Cola Co. advertising executive. He was brought in as an adviser by Johnson in February and oversaw the development of the ad. Now he’s heading the chain’s marketing efforts. He’s best known for overseeing the disastrous release of New Coke in 1985, and now he has another reclamation project on his hands.

At Coca-Cola, he rebounded from New Coke by reversing course quickly and bringing back the original formula. He branded it Coca-Cola Classic, won back customers and sales increased.

Zuckerberg Apology

There’s a long history of corporate apologies for a multitude of perceived sins -- from Reed Hastings, CEO of Netflix Inc. (NFLX), trying to explain a price increase in a web video in 2011 to Facebook Inc. (FB) CEO Mark Zuckerberg’s multiple mea culpas on the social network for changes to privacy settings.

Fewer companies take the step of crafting an ad and then paying to air it on television. One of the most recent examples came when former BP Plc (BP/) CEO Tony Hayward said: “I’m deeply sorry” in a widely played television spot in 2010 after the oil spill in the Gulf of Mexico.

For J.C. Penney’s apology to work, the changes it makes after the ad to win back customers will be essential, Calkins said. Plus, with the ad running on television and the company asking on Twitter for suggestions on how to improve, the message will be heard quickly by a large group of people. That will only increase expectations, he said.

“There is no question that an apology can help a brand recover from a setback,” Calkins said. “The key is you then have to follow it up and live up to the apology.”

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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