J.C. Penney Returning To Gimmicky Sales Show A Turnaround In Tumult

J.C. Penney’s decision to return to gimmicky promotions—a sale for friends and family, 2o% off!—reflects how mightily that company is struggling under the direction of new CEO Ron Johnson.

Starting this week, the 110-year-old department store chain will bring back some of the sales that it swore off last year,the Associated Press reports. Meanwhile, J.C. Penney will feature new price tags next to merchandise that shows how much customers save by shopping there.

It’s exactly what Johnson said he wouldn’t do. He pledged to give up promotions, part of an grand scheme that would change nearly every aspect of the company. Instead, it’s one of the many ways he has demonstrated a misunderstanding of J.C. Penney’s customers and another reflection that his plan isn’t taking hold.

What else has gone wrong? By scrapping sales—coupons too—J.C. Penney alienated its core customer base. The middle income shoppers who went to J.C. Penney no longer feel comfortable there. Nor will they recognize the place soon. Johnson plans to dramatically renovate each of J.C. Penney’s 1,110 stores, widening the aisles and adding flashy technology. Coffee bars will, perhaps, make it a hang-0ut spot. Yoga classes and hair salons, too.

All this hasn’t gotten J.C. Penney far. It probably just booked its fourth consecutive quarter of losses. Sales have fallen, too, likely off more than 20% in the past year. Shareholders wiped away half the company’s value in a year, the debt downgraded to junk status.

“He’s trying to manufacture a massive turnaround when everybody is trying to leave,” says Margaret Bogenrief, a principal at ACM Partners, a distressed investing boutique. I spoke to her several weeks ago, before news of this latest change. Even then, she didn’t spare a kind word. “What’s the best case scenario here? That they become a super, super distant second to Target. They’ll be like, the poor-kids-version of Target.” Aside from Target, of course, J.C. Penney competes with Macy’s, Bon-Ton and Kohl’s, as well as Gap.

The poor finances and empty stores are forcing Johnson to pivot…returning somewhat to where he began. This latest news that J.C. Penney will bring back some sales—Valentine’s Day jewelry, 20 off!—shouldn’t come as a surprise. A few months ago Johnson resorted to personally emailing coupons out to customers (accompanied by an apology for the recent struggles). He argued the $10-off discounts were gifts, not coupons. A lame kibitz. Sort of like insisting on labeling a coat as a jacket because a store still has too many parkas come spring.

Sales are back. Stand-by for news that you’ll soon be inundated with coupons. Again.

Forbes.com