JC Penney likes Coupons

So maybe JCPenney shoppers don’t hate coupons after all.
New CEO Ron Johnson — who aggressively revamped the chain’s pricing strategy this spring with the idea that customers were annoyed by coupons — admitted yesterday that he may have miscalculated.
“Our first 90 days were tougher than expected,” Johnson told investors at a presentation in Manhattan.
In January, the former Apple exec had shrugged off concerns about going cold turkey on coupons, launching a TV ad campaign that depicted shoppers screaming “No!” as they clenched circulars in frustration.

But yesterday, as the aging department-store chain reported a $163 million loss on a steep sales decline, execs were forced to admit that getting rid of coupons likely drove a 10-percent drop in customer traffic.
“We did not realize how deep some of our customers were into this,” operating chief Mike Kramer said of coupon clipping. “We’ve got to wean them off this and educate our consumers.”’
Penney shares plunged more than 12 percent in after-market trades, after closing at $33.32. The sell-off hit high-profile shareholders including hedge-fund tycoon Bill Ackman, whose one-day paper losses totaled more than $150 million.
The heart-stopping drop in store traffic, Penney execs said, was the company’s biggest problem as sales plummeted 20 percent to $3.15 billion during the first quarter — nearly twice the decline that analysts had expected.
Penney is getting clobbered on weekends, when coupon clippers are heading to competitors like Macy’s and Kohl’s. But Johnson tried to put a positive spin on the news, saying the new pricing strategy is


making weekly shopping patterns more predictable, creating an opportunity for more efficient inventory management.
Penney’s revenue drop was accompanied by an 18.9 percent plunge in sales at stores open at least a year, fueling a wider-than-expected loss of $163 million despite ruthless cost cuts that slashed jobs and inventory.
In a bid to conserve cash, Penney suspended its dividend and backed off its previous full-year profit forecast. Penney likewise declined to give a sales outlook, though it said declines should narrow.
Penney will open 10 new in-store shops this fall as it rolls out a swath of new brands, according to President Michael Francis. In addition to Martha Stewart home products next spring, Penney will tap exclusive lines of housewares from Jonathan Adler as well as Michael Graves, who last year ended a long stint at Target.

Read more: NY Post