J.C. Penney (NYSE: JCP) is either on the brink of an epic turnaround, or might very well be facing it’s final days. The retailer has struggled to reinvent itself under Chief Executive Rob Johnson. Johnson, the former Apple executive brought into JCP to turn around the brand, has sought to reinvigorate the franchise by replacing it’s rather dull perception with a more youthful cutting edge approach. Thus far, the results have fallen flat.
New pricing, fully refreshed stores designed to be a destination “mall within a mall” and partnerships with fashion forward brands never before associated with the dowdy J.C. Penney. J.C. Penney has fell short of the lofty ambitions. Last night it concluded one of the worst years in corporate history with the announcement of their 4th Quarter results.
Consider the results from the fourth quarter. JCP lost just short of a billion dollars for the year with $551 million of that coming in the all important holiday period. The company laid off more than 30% of the employees at its Dallas HQ, over 1,600 people. Total revenue fell 25% and Internet sales dropped a stunning 34%. To make matters worse, Internet sales for rival Macy’s (NYSE: M) grow its online business 48%
Customer don’t like surprises which is why 17% fewer of them even bothered to step into a J.C. Penney store last year. History shows that retailers go bankrupt when they run out of money and time. J.C. Penney is burning through cash at a stunning rate, resorting to measures like slow-paying vendors and selling goods at a loss just to create liquidity. Sales continue to get worse and are shrinking at a pace that suggests it could be in serious financial trouble by this summer if things don’t improve.
For J.C. Penney, time is running out quickly. Johnson’s plan in the end will either restore glory to the once dominant retailer, or usher in it’s collapse. The end result will likely become more clear this year.
