Ron Johnson’s turnaround at J.C. Penney is in the early stages, but so far, it’s not very promising.
Sales, earnings, traffic – everything – seems to be headed down, according to the company’s latest financial report, and now the stalwart department store chain faces serious headwinds from a slowing economic recovery.
Johnson, a former Apple executive and longtime retail executive, is trying to hold on to Penney’s traditional, bargain seeking-customers, while trying to appeal to new customers. In doing this, he risks alienating his existing middle-American customers.
If Penney’s latest financial report is any indication, Johnson has frightened off customers by getting rid of sales and coupons. At the same time, he is stepping into a culture war, marketing to the gay and lesbian community. It remains to be seen whether members of the gay and lesbian community will rally around Penney in sufficient numbers to offset those boycotting Penney. It is yet another big risk Johnson is taking that may not pay off and indicative of the kinds of bold moves Johnson is willing to make.
Frankly, despite Johnson’s impressive retailing background, I’m not sure he’s going to pull this one off. Penney may be stuck in a model it created long before Johnson came along, and the economy may be going against it in a big way as Johnson tries to transform it.
Click here to read my column in The Sunday Wall Street Journal.