It's fair to say that when J.C. Penney announced last year that it had hired former Apple and Target wunderkind Ron Johnson to replace Myron "Mike" Ullman as chief executive, the reviews were almost universally positive.
It's also equally fair to acknowledge that once details of Mr. Johnson's plan to reinvent Penney started to become public, there were many who voiced skepticism about his ability to get the job done. A case in point is Penney's "fair and square" modified every day low pricing strategy. Only 28 percent of respondents to a RetailWire poll in January, for example, thought the department store chain would become more competitive by moving away from the rampant discounting of old.
As it turns out, Penney's attempt to wean its customers cold turkey off of the crazy couponing of old has failed to generate either the number of visits (down 10 percent in Q1) or market basket rings (minus five percent) that Mr. Johnson and company have been seeking.
"I don't know that we're giving up customers. Our customer is clearly buying less with fewer visits in the short term, but we want to earn her back, earn him back," Mr. Johnson told analysts at a presentation, according to Advertising Age.
J.C. Penney shares dropped more than 20 percent yesterday on the news, the single biggest decline since the company was first listed on the New York Stock Exchange in 1929.
Mr. Johnson pointed his finger at a failure of the company's advertising to communicate to customers that they are getting a better deal today with "fair and square" than they were during Penney's previous coupon days.
Roxanne McKenzie told The Wall Street Journal that she used to shop at the department store on a weekly basis for herself and her grandchildren, but has cut back since Penney changed its pricing structure.
"I shop less now because I don't have a coupon," Ms. McKenzie told the Journal.
While consumers have yet to flock to Penney, Mr. Johnson and, more importantly, the company's largest shareholder William Ackman have voiced confidence the company will get turned around. Optimists point to ongoing store remodels, the addition of exclusive brand lines, cross-channel integration efforts and a marketing program designed to educate consumers as reasons to believe same-store numbers will begin to trend more positively in upcoming quarters.
Are you more or less optimistic today about Ron Johnson's plan to turn J.C. Penney around than you were at the beginning of the year?