JC Penney has been seriously struggling lately, with the sale constantly falling, while the retailer keeps losing money. And this happens because customers found other places for shopping, while those who remain faithful to the retailer don’t visit as often as they used to.
It appears that one of the main reasons causing this is the rise of online retail, as buyers in the United States prefer to choose their clothes, home furnishings or makeup from the Web.
This is a situation that keeps affecting shopping malls in the USA but JC Penney is one of those retailers which got hit very hard.
To be more specific, a sales decline between 7% and 8% is expected for the fiscal year 2019, while a quarterly sales gain hasn’t been reported in the last two years.
“We know we need to deliver something different,” said CEO Jill Soltau, in an analysis presented on Friday morning. And it appears that one of her biggest ambitions is to avoid the fate of Sears, who filed for bankruptcy.
Analysts consider the retailer’s restoration strategy a thoughtful one
“Favorably, unlike some of Jill Soltau’s predecessors, she seems to want to embrace the core JCPenney shopper for who that is…rather than attempt to trade-up,” said Chuck Grom, analyst for Gordon Haskett.
“Indeed, focusing on visual merchandising and driving traffic are sound strategies, but will take time,” he added.
On Friday, investors managed to send the shares up about 6%, reaching a trading price of $1.16. It’s also worth mentioning that the stock has been at risk of being delisted from the New York Stock Exchange but somehow managed to rise with around 5% in 2019, finally going above $1, while the market cap remained at around $376,6 million.
Previously, in the third quarter of the year, JC Penney reported a narrower-than-expected loss, adding that some of their latest actions contributed to this. We’re talking about using improved apparel displays in stores, as well as bringing mannequins back into women’s departments.
A completely new store concept
As for what comes next for the retailer, JC Penney recently opened a new store in Hurst, Texas, considered as a “brand-defining space”. It includes a barber-shop, otherwise a premiere, a play area, a cafe, styling rooms for both men and women, and a selfie studio.
“Our brand-defining store is the fullest articulation of our customer strategy. It is a store where we can leverage learnings from customer feedback, yet also observe customer preferences and shopping behaviors,” Jill Soltau declared.
But, on the other side, we’re talking about 800 other locations across the United States, which also need a refresh, in order to see any notable changes. Therefore, it’s hard to say if this strategy will make any difference, despite the CEO’s enthusiasm.
Right now, the holiday seasons remains their only hope and can be considered a turning point. It will be a huge chance for JC Penney to prove themselves, even though most shoppers visiting stores won’t be able to try their latest experiences.