JC Penney is one of America's best-known general retail groups, specialising in clothing, accessories and home furnishings but it has struggled for several years to reignite performance. The company first began to lose sales and market share in the 1990s as customers moved away to less traditional outlets, especially discounters such as Walmart. Penney's fought back with a marketing campaign designed to show that its department stores offer casual as well as conservative fashion at affordable prices. But the company also had to close several stores, and restructure others in order to regain profitability. Financial performance improved significantly between 2004 and 2007, before hitting a brick wall at the end of the decade as a result of the recession. Despite its best efforts to-date, Penney's has found it hard to shake off perceptions that it is a tired and slightly dowdy brand. A new management team launched an ambitious overhaul of JCP's strategy in 2012, but not only did the long-expected turnaround fail to materialise but in fact performance significantly worsened, leading to another management overhaul a year later. It is still searching for a lasting fix.
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Adbrands Weekly Update 2nd Nov 2017: JC Penney unveiled a grim set of results for the latest quarter, lowering expectations for the all-important holiday quarter ahead. A move to clear out slow-moving apparel inventory in September and October lifted revenues but caused a sharp decline in profitability, forcing the struggling retailer to lower expectations for the full year. That pushed Penney's share price to record lows, driving down its market cap to just $970m. At that price, "Amazon should buy JCPenney for 'pennies'," suggested a columnist for Forbes magazine, to create a network of "store fronts and distribution centers for its online merchandise that caters to middle and low-income shoppers".
Adbrands Weekly Update 8th Oct 2015: McGarryBowen bounced back from the loss of the Sears retail business last week with the capture of the (rather more financially stable) JC Penney, which unveiled a clean sweep of its marketing roster. Digital agencies EVB and We Are Social also bid farewell to the account and were replaced by hip-hop mogul Russell Simmons' Narrative agency.
Adbrands Weekly Update 30th Apr 2015: JC Penney appointed former Mondelez CMO Mary Beth West as its new chief customer & marketing officer. She was already a director of the troubled apparel retailer, and succeeds Debra Berman, who left the company last month.
Adbrands Weekly Update 19th Mar 2015: Struggling US retailer JC Penney announced the abrupt departure of chief marketing officer Debra Berman after less than two years in her role. Prior to the appointment of a successor the department is jointly headed by Kirk Waidelich and Lynne Bartron (VPs, marketing strategy).
Adbrands Weekly Update 5th Mar 2015: JC Penney - which had appeared to be recovering well from its 2013 woes - reported a surprise loss for the holiday quarter. Stronger than expected sales growth was offset by an even higher increase in promotional and operating expenses. Full-year revenues rose 3% to $12.3bn, a welcome improvement over the year before though still far below past highs, but the group reported its 4th consecutive annual loss, of negative $771m.
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Free for all users | see full profile for current activities: James Cash Penney began his retail career in 1898 as a shop assistant in Golden Rule Stores, a small chain of stores in Wyoming. The chain's owners were impressed with the 23-year-old and installed him as manager and partner in a new store in the mining town of Kemmerer, which opened in 1902. Penney broke with tradition by operating on a cash-only basis and set fixed prices for goods, instead of offering discounted prices depending on each shopper's status in the town as had previously been the norm. The business was so successful that Golden Rule's owners quickly gave Penney two more stores to run, and subsequently agreed to sell all three outlets to him in 1907.
Now the owner of his own small chain, Penney expanded his empire rapidly. Each new store was established as a partnership between Penney and a resident store manager. By 1912, there were 34 outlets, with combined sales of over $2m. Each was obliged to operate by strict guidelines for providing the best service and courtesy to customers. Article 1 of The Penney Idea, his code of conduct drawn up in 1913, was "To serve the public, as nearly as we can, to its complete satisfaction." That year, the chain changed its name from Golden Rule to JC Penney Inc and set up headquarters in New York. By 1915, it had expanded to 86 stores, then almost 200 by the start of the 1920s. That decade saw astonishing growth, as Penney opened on average a new store every 3 days. By 1930, the small chain of 3 outlets had mushroomed to almost 1,400, with one in almost every small town across the country. Despite the Depression, expansion continued during the 1930s, but at a much slower pace. By 1940, the chain had grown to almost 1,600, with sales of over $300m.
In the post-war years, the company opened its first "drive-in shopping centers", larger stores situated off the main street. As sales climbed beyond $1bn, the group developed these outlets into fully-fledged department stores offering a wider variety of merchandise. In 1958, JC Penney introduced customer credit for the first time, and added restaurants and garden centres to its product range. In 1962, the group acquired mail order business General Merchandise which it relaunched as the JC Penney Catalog the following year, with home sales rocketing to $200m by the end of the decade. In 1967, the store branched out into financial services, and acquired the Thrift Drug Company two years later.
James Penney died in 1971 aged 95. Over the following years, sales continued to grow, more than doubling by 1980 to $11bn, but the group began to find other retailers stealing parts of its market. More importantly Penney's was damaged by unsuccessful attempts to transfer its US department store concept to Europe. Chains in Belgium and Italy were bought but quickly sold. Too broadly based to compete on all fronts, JC Penney restructured in 1983 to concentrate on apparel, leisure lines, and soft home furnishings, and acquired First National Bank of Delaware, renamed JC Penney National Bank, to issue credit cards.
As the 1990s arrived, the group continued to refine its audience, concentrating more closely on the women's market. In 1995, another foray abroad, but closer to home, led to the opening of a first store in Mexico. At the same time, the Thrift drugstore business was bolstered with a series of acquisitions including Kerr Drug Stores in 1995 and Fay’s in 1996. The purchase of Eckerd Corporation in 1997 for $3.3bn made JC Penney the country's #4 drugstore business with over 2,600 outlets. In early 1999, Genovese Drug Stores were added to the portfolio.
The group began to pull out of financial services in 1997, selling its credit card business to Associates First Capital, and JC Penney national bank branches to First National Bank of Wyoming. In 1999, the group sold its JC Penney private label credit card business to GE Capital, which continues to operate it under license. Sales in 1999 were $31.7bn, including almost $4bn from the Big Book catalog. But the group was already under considerable pressure from Wal-Mart and other discounters. JC Penney's sales slumped at the close of the decade, and the company had to write off substantial amounts as it consolidated its portfolio of drugstores.
The group announced plans to spin off a stake in Eckerd to raise its share price, but cancelled the IPO as a result of stock market volatility. It also closed around 100 under-performing department stores and 350 drugstores in 2000 and 2001, and sold its direct insurance sales division to Dutch insurer Aegon for $1.3bn. Rebranded as Stonebridge Life, these insurance plans are still sold via JC Penney stores. In a bid to increase the appeal of its tired stores, the group launched a $1bn investment program in 2002 for refurbishments. Myron Ullman, a former CEO of luxury group LVMH, replaced Allen Questrom as chairman & CEO at the end of 2004. See full profile for current activities
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