It is no secret that J.C. Penny has been experiencing a decline in sales. With the appointment of a new CEO, experienced in selling Apple products, his insight and expertise did little to help the struggling retailer. Mr. Johnson believed that renovating the stores, and removing the coupon strategy would bolster sales, but instead as had the opposite affect. Customers that shop at J.C. Penny's like coupons, it gives the customer a sense of euphoria when handing the clerk coupons - since the company has strayed from this strategy, it has been a struggle to bring these people back into the store. Financially Penny's only has enough cash to operate into early next year, however since Mr. Johnson's departure the company is still in the midst of a renovation at many of its stores. The company will need to borrow money from investment banks to utilize 100% of the shopping floor space. The company is also in a race to finish before the back to school and holiday shopping season begins.
The former CEO, Micheal Ullman, has a lot of work ahead as he tires to figure out what marketing strategies to keep from the former CEO and which strategies to reinstate from his tenure. Although the firm is hemorrhaging cash, the Penny has a $1.85 billion line of credit, however drawing from it could signify to investors there is more trouble ahead, driving down the price of its stock.
I do believe it is important to continue with the renovations, the company has been around for a long time and last time I was in a store it seemed dark and gloomy. I noticed at my local mall, Penny was renovating the store, aware of the problems their experiencing I was enticed to walk around to see what had changed. To my amazement, the store is brighter, and seems to be a little easier to navigate. I personally believe if they bring the coupons back, and possible re-tool some of the merchandize the company can make a comeback. The cost will be high to bring the discouraged customers back to the store however.
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