This past weekend a rather large card arrived in the mail.\u00a0 At a glance its contents offered a most significant message with the same efficient impact of a picture post card providing a glimpse inside a vacationer\u2019s joy at an exotic locale.<\/p>\n
However in this case any recipient with an interest in retailing could not help but interpret the contents of the 11\u201dx6\u201d post, as an admission of recent errors and a major correction in course for its sender, JC Penney.\u00a0 The only element missing to formalize a true admission was a signature, in this case that of CEO, Ron Johnson.<\/p>\n
About a third of the card was a tear-off coupon boldly stating, $10 OFF and going on to clarify with the words, \u2018your purchase of $50 or more\u2019.\u00a0 The promotion was limited to the days between Tuesday, April 2 and Sunday April 7.\u00a0 Perhaps the company wanted to avoid any implication of an April Fools prank and so the event commenced on a Tuesday.<\/p>\n
Just over a year ago, then newly crowned CEO, Ron Johnson announced essentially the rebirth of the more than a century-old retailer with detailed, radically new merchandising policies which were to do away with the nearly six hundred promotions of the previous year.\u00a0 Coupons were out as a relic of the past.\u00a0 Events based on crazy store hours were also to be done away with.\u00a0 This was strongly promoted in a series of highly visible ads, including \u2018arty\u2019 commercials featuring former company associate Ellen DeGeneres.\u00a0 The new corporate mantra was to be, everyday low pricing.<\/p>\n
Much to corporate\u2019s surprise, many traditional, even long-term customers stayed away in droves.\u00a0 Some, who remained loyal, began to blog of a sharply perceived loss of quality in private label apparel which accompanied the newly arrived everyday lower prices.<\/p>\n
Worse, quarterly financials consistently reflected the sharp negative reactions to the new policies at JCP.\u00a0 By year\u2019s end, after a disastrous, all-important holiday season, corporate numbers were stunning. \u00a0Total sales for the fiscal year decreased 24.8 percent to $12.985 billion.\u00a0 Comparable store sales declined 25.2 percent. \u00a0Even Internet sales had decreased 33.0 percent from the previous year.<\/p>\n
Compounding the situation, by year\u2019s end, JC Penney stock had lost more than half its value from the time Johnson\u2019s policies began to be implemented.\u00a0 Since the recent New Year, the stock\u2019s value has declined an additional twenty five percent.<\/p>\n
These numbers have heightened edgy concerns from Wall Street and have created strong tensions among members of the JCP board.\u00a0 They have also spawned a series of awkward denials to calls for a return to the merchandising policies of the past.\u00a0 These denials have often been couched in words vaguely refuting JCP\u2019s recent overall failures and terming seeming reversals of Johnson\u2019s policies as evolution.\u00a0 Through its current mass-mailing of coupons, it seems that the company is quietly admitting to a return to its longtime, promotion-based merchandising policy, even if in a manner that continues to reflect a tone of refusal to admit failure.<\/p>\n
Now comes the accompanying news from JC Penney\u2019s board of directors, that CEO, Ron Johnson, is having his pay cut by 97 percent for 2012.\u00a0 In addition, company senior executives are being denied their annual cash bonuses for 2012.\u00a0 Though the previously stated numbers would seem to easily justify such normally drastic moves, such corporate punishment does not always accompany notably poor performance.<\/p>\n
Recently, despite abject corporate failures which ultimately led to the sale of its retailing operations, Supervalu\u2019s top executives were treated to eye-opening financial spoils despite companywide pronouncements of austerity, steep budget cuts and employee layoffs which included many long-time loyalists.\u00a0 Despite cutbacks in minimal employee perks, when the CEO was relieved of his duties, he left with an enviable financial package.\u00a0 His short term replacement was again extremely well compensated when he oversaw the sale of the company\u2019s retail operations.<\/p>\n
Golden parachutes are often dangled to temper unacceptable corporate results.\u00a0 Several years ago after a heated annual shareholders meeting at Home Depot, then CEO Robert Nardelli was eventually sent packing.\u00a0 One aspect which increased the tension at the meeting was the more than $120 million golden parachute Nardelli was to receive if indeed he was forced to depart.\u00a0 Ultimately, despite the shareholder\u2019s intense fury, as Nardelli was relieved of his duties, he relieved the company coffers of those many millions.<\/p>\n
Currently there is a great deal of speculation as to Ron Johnson\u2019s future with JC Penney.\u00a0 Though many of his ideas for change, both in merchandising as well as in store design, were considered as perhaps future industry-wide game changers, his refusal to test radical change while turning a deaf ear to the cries of loyal, long-time customers, despite timely admonitions from JCP board members and executives, may hasten his departure.\u00a0 Don\u2019t feel too sorry for his financial plight.\u00a0 Even after his severely reduced annual financial package he is still set to receive nearly $2 million for the year.<\/p>\n
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