The JC Penney website lists 374 clocks, and all of them are ticking when it comes to the future of the retailer.
After reporting a mixed bag of numbers on Thursday for the holiday quarter—some more encouraging than expected but nevertheless all in the context of “they weren’t as rotten as you thought they would be”—Penney executives gave some insight into what the big plan is to save the beleaguered retailer.
So far, it is underwhelming—at best.
Yes, there were some key personnel announcements. Thank heaven there’s finally a new chief merchant, after an excruciatingly long period of time without one. And yes, there are more store closings, even if the number—18—is still rather modest by 2019 standards.
And yes, the company has made some serious inroads into the piles of bad inventory it had sitting around, always a good thing when the golden rule of retailing is “the first markdown is always the best markdown.”
And finally, there were continued statements that Penney’s future lies in clothing and soft home, not in refrigerators or furniture. That all one had to do was look at the numbers to figure this out doesn’t diminish the acknowledgement that there has to be a better mix of products on the selling floor more relevant to its intended customer base.
But what was missing is what’s been missing in the nearly five months since Jill Soltau took over as CEO: any real sense of urgency. As evidenced by a 4% drop in comp store sales and an even uglier 8.4% fall in overall sales for the fourth quarter, it is not unfair to say Penney is in a free-fall and nobody seems to know where the parachute is, much less how to open it.
The company said it is acting “swiftly but thoughtfully,” and while we get that the last time Penney management moved too quickly, it resulted in the Ron Johnson disaster, “swiftly” seems to be in the eye of the beholder.
On the call, it acknowledged the following:
- It is only about two-thirds of the way through developing its long-term growth strategy.
- It doesn’t have anybody to lead its e-commerce efforts yet.
- It is still reviewing its pricing and promotional strategy.
- It doesn’t quite know what it will do with all the space being vacated by appliances and furniture.
- It is focused on building its “fundamentals of retail.”
Any one of those on its own would be grounds for concern, but taken together, it all goes way beyond concern—particularly the “fundamentals of retail” statement. Even assuming anybody knows exactly what that means, it is especially scary that Penney still doesn’t really know what it wants to be.
There’s no denying that Penney is in a very difficult position and that prior management groups haven’t done it any favors by digging it into a gargantuan hole from which it needs to get out. Retailing has never been more competitive, and the stakes never higher.
But c’mon. There is no time to waste here, folks. Even though the big due-bill on its massive $4.2 billion debt doesn’t really hit for another two years, its lenders are only one of the three legs Penney needs to worry about: Its vendors and its customers are the other two, and they each have very short attention spans these days.
The longer Penney stays iffy to the former and is increasingly irrelevant to the latter, the deeper the hole gets.
On its analyst call this week, Soltau said, “Our current reality is clear: JC Penney has been and continues to be in transition.” Transitioning in which direction is the big question.
Date: March 7, 2019