Initial impact of JCPenney pricing shift to be discovered tomorrow
May 14, 2012,
Plano, Texas - Late tomorrow afternoon, JCPenney's ceo will face analysts for the first time since he unveiled the company's ambitious makeover plan in February.
As part of the February presentation, Ron Johnson promised he would come to New York at the end of each fiscal quarter to speak face-to-face with analysts and field their questions about the company's progress.
JCP abandoned aggressive promotional discounts as of Feb. 1 in favor of streamlined, everyday pricing. Johnson said in February he expected sales to take a hit in the first half of the year and begin to recover in the second half.
In last year's first quarter, JCP generated earnings of 28 cents per share. Current analyst estimates range from earnings of 5 cents per share to a net loss of up to 51 cents per share.
The big question is how much patience Wall Street will give the new executive team at JCP, many of whom only recently joined the company. The new pricing strategy has been in place for just 15 weeks. The first of the shop-in-shops Johnson envisions as key to transforming the department store won't open until August. The Martha Stewart shop-in-shops won't debut until next winter. And the first fully fledged prototype store - with 80-100 shop-in-shops along a virtual Main Street encircling a "Town Square" that offers as-yet unspecified services - is scheduled to be unveiled at some point in 2013.
During the February presentation, the most frequently asked question from Wall Streeters was how much of a sales decline JCP would tolerate before it abandoned everyday pricing. Johnson asserted Penney would not drop the pricing strategy - period.