August 20, 2013
Ronald Friedman, Co-Leader, Retail/Consumer Products Industry Group, Featured in BuzzFeed Business Article "a J.C. Penney Hits Reset to Before Former CEO's Arrival"
By Sapna Maheshwari
J.C. Penney reported its second-quarter results today, and the biggest takeaway was that it's essentially hitting the undo button on former CEO Ron Johnson's tenure.
J.C. Penney used Tuesday's earnings report to both wash its hands of former chief executive officer Ron Johnson and lay the blame for its disastrous performance over the last 18 months at his feet.
"There are no quick fixes to correct the errors of the past," said current CEO Mike Ullman, who was brought back to the company to replace Johnson in April. "That said, we have identified the challenges, put solid plans in place to address them, and have experienced and capable people in key roles to do so."
Included among the areas in need of "fixing" is the retailer's home departments, where Johnson's "lengthy renovation and disappointing re-merchandising" hurt the company's sales results during the second quarter. Ullman said J.C. Penney is planning to reverse the slide by restoring private-label brands such as St. John's Bay, bringing back more than 1,000 permanent cash registers and the J.C. Penney customer loyalty program, amping up coupons and sale events, and reinvesting in the company's workforce.
J.C. Penney also said today that it hosted summits for domestic and international suppliers during the quarter, citing their "strong support" for the retailer. Credit has become a major concern for J.C. Penney after a report in The New York Post this month said CIT Group temporarily stopped financing deliveries from smaller manufacturers to the company – a claim the retailer said was false.
Still, J.C. Penney has a long way to go toward restoring goodwill among its supplier network.
"If I'm a supplier to J.C. Penney, I'm basically giving them short-term credit, meaning I want to get paid every 30 days, I don't want to take an order six months out — maybe two or three months at the most," said Ron Friedman, head of retail and consumer products at Marcum, which works with a number of J.C. Penney vendors. Factors such as CIT, which guarantee the credit of manufacturers, are adding a surcharge of 1% to 2% to do business with J.C. Penney, making the entire process more expensive, he said.