Penney says turnaround takes hold, ends monthly sales reports
When Ron Johnson was CEO of J.C. Penney, he decided to forego providing Wall Street with monthly sales reports as they proved a distraction to his grand retailing experiment. When Mr. Johnson’s initiatives failed, his successor Myron "Mike" Ullman brought back monthly reports so investors could see progress was being made in turning the company around. Now, following a positive quarterly earnings report, Mr. Ullman has decided that monthly reports will not be needed.
"We stabilized our business, both financially and operationally, and restored our process disciplines, promotions, inventory levels and focus on the customer. As a result, we generated positive comparable store sales in the fourth quarter and ended the year with more than $2 billion in total available liquidity, said Mr. Ullman, in a statement. "These important accomplishments reflect the progress we have made in our turnaround, which remains on course heading into 2014."
Analysts were divided on the decision to drop the monthly reports with those against it arguing that investors benefit from having more information and not less.
Paul Swinand, an analyst with Monrningstar, told Bloomberg News, "It’s a mild positive, in that they always said they didn’t want to go back to monthly sales. Macy’s Inc., Nordstrom Inc. and Wal-Mart Stores Inc. have all dropped."
While Penney reported a same-store sales increase of two percent for its fourth quarter (holiday sales were up 3.1 percent), there are still those who question the chain’s business prospects.
An article by Mitchell Schnurman of The Dallas Morning News argues that Penney is operating with way too many stores. The chain intends to close 33 stores by May, but once that is done, he wrote, Penney will have roughly the same number of stores as it did in 2007 and sales for the company were $8 billion above current levels.
- JCPenney Reports Fiscal 2013 Fourth Quarter and Full-Year Results – J.C. Penney Company, Inc.
- J.C. Penney Ends Monthly Sales Reports – Bloomberg News
- Schnurman: With falling sales and traffic, Penney needs to shrink – The Dallas Morning News
Is now the right time for J.C. Penney to discontinue monthly reports? Do you agree or disagree that the chain is seriously over-stored? Do present locations have a role to play that goes beyond profitability, e.g., as local distribution centers for online orders and pickup destinations?