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Has an extra 30% off clearance items compromised JCPenney CEO Ron Johnson's "simpler" two-tier, no sale pricing system? Wall Street thinks so. More specifically, Charles Grom, an analyst at Deutsche Bank in New York, called out the company for backtracking.
Grom wrote to his clients yesterday that the sale probably means the business plan has failed the department store, leaving a lot of unsold inventory lying around. He wrote:
"On the heels of a $10 in-store coupon provided earlier this month, free haircuts for kids, and free family photos to begin later this week, we believe JCP is backtracking on its no promotion strategy, confusing customers. We, therefore, remain skeptical of near-term improvement in business trends."
A JCPenney spokesperson has responded saying, "We are not changing our pricing strategy. [JCPenney] still has two kinds of pricing: everyday low prices and clearance. We utilized a temporary percentage-off clearance, as is common in the industry, to help reduce inventory levels at the end of the season."
So like an end of season sale? But whether or not a sale on clearance constitutes a change of policy, Grom's report caused JCPenney's shares to fall 5.7 percent, which doesn't bode well for the struggling company.
· J.C. Penney Shares Fall on Report [WWD]
· JCPenney's Thank-You Coupon 'Does Not Reflect in Any Way' a Departure From No-Sale Policy [Racked]
· Joe Fresh Joins the JCPenney Shop-in-Shop Lineup [Racked]