Oct. 31 (Bloomberg) -- J.C. Penney Co., the 110-year-old department-store company, is “backtracking” on Chief Executive Officer Ron Johnson’s new pricing strategy with a 30 percent discount on clearance items, according to Deutsche Bank AG.
The deal, advertised by e-mail, is available both in-store and online from Oct. 28 to Nov. 3, Charles Grom, an analyst at Deutsche Bank in New York, wrote in a note to clients today.
“On the heels of a $10 in-store coupon provided earlier this month, free haircuts for kids, and free family photos to begin later this week, we believe JCP is backtracking on its no promotion strategy, confusing customers,” said Grom, who has a “hold” rating on the stock. “We, therefore, remain skeptical of near-term improvement in business trends.”
Grom said the promotion suggests inventory levels may be in poor shape relative to sales.
Johnson, the former Apple Inc. retail chief who joined as CEO in November, has tweaked his pricing strategy after a previous plan confused customers by reducing sales events and coupons. The Plano, Texas-based company, which reports third-quarter earnings on Nov. 9, posted sales declines of more than 20 percent in the first and second quarters amid the pricing shifts and changes to the store’s layout.
The shares fell 5.7 percent to $24.01 at the close in New York, the biggest one-day decline since Sept. 20. The stock, which had the fifth-biggest loss in the Standard & Poor’s 500 Index today, has declined 32 percent this year.
Rival department-store company Macy’s Inc. also declined today amid concern that Hurricane Sandy may result in lower sales. The retailer fell 1.1 percent to $38.07. Competitors Kohl’s Corp. and Sears Holdings Corp. rose.
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