JCPenney (NYSE:JCP) did worse than expected in what everyone expected would be a terrible quarter—and on Tuesday (Aug. 20) blamed it all on Ron Johnson and Bill Ackman.
The 1,100-store retailer's $586 million loss was four times the size of the loss a year ago, when ex-CEO Johnson's grand plan for reinventing Penney's was already beginning to show cracks. Sales were down 12 percent. Even online sales were down 2.2 percent. The only near-term good news: Penney's isn't on the verge of going broke and back-to-school looks promising.
None of this is a surprise, nor is the fact that the retailer officially blamed Johnson and the former board member who installed him, hedge-fund manager Bill Ackman, who is also still Penney's biggest shareholder.
In particular, the chain's earnings announcement singled out the expensive Home departments that went into almost half of JCPenney stores at the end of Johnson's tenure. The new department "has not resonated well with customers. For example, early feedback has made it clear that customers would prefer a more balanced assortment between traditional and modern home furnishings, a better selection of good, better and best price points across key items, and would prefer to see certain merchandise arranged by category rather than brand." In short, Penney's shoppers liked it better before. "Restaging" to give customers what they said they want should be completed " in the third quarter."
It had better be. Penney's third quarter ends a few days after Black Friday. Even if the Blame Ron Johnson strategy is justified (and it likely is), that will be irrelevant if Penney's doesn't have a good holiday selling season.
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