JC Penney piles sale upon sale trying to dig out of ‘abyss’

Bloomberg

Walk into a JC Penney and it’s a sea of red stickers. Almost everything is marked down, from apparel, jewellery and home goods to Christmas decor, bedding and appliances. And it’s not even Black Friday yet.
Even for a retailer whose identity is built on promotions and discounts, there’s an urgency to this holiday season. JC Penney Co.’s bonds are near record lows, its stock has slid towards a buck a share, and brand new CEO Jill Soltau is pushing her team to shovel out the dated goods that she says make the stores feel “over-assorted and heavy on inventory.”
Cruising a single store — in this case, New York’s Herald Square — it’s easy to see Soltau’s point. Racks are jammed with retro logo sweatshirts. Some of the womenswear skews to the frumpy side.
And while someone may want leaves-and-berries dinner plates, such merchandise hardly speaks to the modern shopper.
“They’re trying to dig themselves out of the abyss,” said Alex Arnold, a managing director of the consumer practice at investment bank Odeon Capital.
“They are trying to churn out the bad products — they need to monetise that inventory and start putting capital into items that will work.”
That abyss may be the fault of Soltau’s predecessors, but it’s hers to overcome since she was hired away from the Joann Stores fabrics-and-crafts chain in October.
“I’m just beginning to spend a lot of time with the customer and customer data and understanding exactly what our customer wants and desires for us,” Soltau told investors on a November 15 earnings call. While Dallas-based JC Penney is making progress on a plan to clear slow-moving inventory by the end of the fiscal year that starts in February, “we know we have more work ahead of us.”
JC Penney simply has too many apparel brands and too much product, said Neil Saunders, managing director of GlobalData Retail. “Some brands, like Alfred Dunner and Adonna, are rather old-fashioned and are not particularly on-trend. There are also some home brands, like Eva Longoria, that need to be cleared out,” he said.

Black Friday
JC Penney has to get this holiday season right or it could be one of its last Christmases, a former CEO of rival Walmart Inc.’s US operations told Fox Business.
JC Penney representatives declined to comment on the company’s strategy, aside from pointing to executives’ discussions on the recent conference calls.
The urgency shows in the run-up to this week’s annual shopping frenzy. The company recently offered early discounts to “Beat the Black Friday Rush,” followed by the “Black Friday Warm Up.” Deals for Black
Friday itself went online started on November 18, with the full selection of markdowns available on November 21.
And for the first time, the chain will carry those bargains into Saturday for the “Black Friday Extended Sale.” Then, the Cyber Monday sales kick off on Sunday. The sales pitches of course aren’t isolated to JC Penney: Black Friday discounts have been inching earlier and earlier across the industry as retailers try to capture shoppers’ first dollars of holiday sales.
Still, JC Penney’s push to scrap as much of its inventory as possible through bulk sales may spell more pain in the short term and put additional pressure on margins.