The 1,100-store chain is also a few months away from going live with a new financial system from Oracle (NASDAQ:ORCL, to be followed before the end of the year by merchandising, planning and allocation systems, all of which will replace legacy systems. That's presuming the board's patience with CEO Ron Johnson holds out—unlike most big chains, JCPenney's E-Commerce site isn't doing any better than in-store, and the chain lost $552 million during the last three months.
By the end of March, "every employee on the floor of a JCPenney store will carry an iPod and be able to check out customers any time and anywhere in the store," Johnson said on the call. "Last week, 25 percent of all transactions were conducted on a mobile device. And this quarter, we will start to feed product information, training and all of our employee support systems directly to employees through our in-store Wi-Fi networks on these iPods."
The mobile POS expansion will also eventually feed into an effort to tie payment-card sales to a loyalty program. Johnson said payment-card transactions are currently about 40 percent of sales revenue, "substantially below that of Kohl's (NYSE:KSS) and Macy's (NYSE:M) and other retailers." He didn't offer details on the effort, but in-aisle POS only works with payment cards, so those iPods aren't going to be as useful without more plastic in the mix.
A much bigger problem is the Web site, where online sales are dropping even faster than store sales—"slightly behind our store sales," as Johnson delicately put it. Part of the problem, Johnson said, is the chain's ill-fated efforts to kill special sales. Seems that the no-special-sales scheme hurt E-Commerce even more than it hit in-store sales, as online shoppers are even more used to—and demanding of—lower prices. Price comparisons are easy in today's stores, but they're far easier online.
He also blamed the online problems on the fact that home furnishings dominate the chain's site, and the chain has yet to roll out some of the big-name home furnishings brands it has signed. "We expect, when we launch products from Martha Stewart and Jonathan Adler and Sir Terence Conran and expand our furniture, that our percent share in Home and online will start to exceed our store sales," Johnson said.
For most big chains, double-digit online growth is compensating at least a little for flat in-store sales. But managing to make online outpace in-store in the wrong direction? That's truly impressive—also in the wrong direction.