Sales of J.C. Penney Company, Inc. (NYSE:JCP) fell both in total and on a comparable store sales basis in its third fiscal quarter ended October 27, 2012. The financial results of this department store chain have been getting steadily worse as J.C. Penney tries to transform itself into a non-promotional, everyday-low-price retailer with shops-within-a-shop. Brand names involved in the shops-within-a-shop include Levi’s, Liz Claiborne, Martha Stewart and Izod.
However, the CEO of the group, Ron Johnson, is still very optimistic. In the company’s press release he was quoted as saying, "While the quarter overall was challenging, the performance of JCP’s new brands and shops reinforces our conviction to transform J.C. Penney into a specialty department store. Today, JCP is really a tale of two companies. By far the largest part of our store is the old J.C. Penney, which continues to struggle and experience significant challenges as evidenced by our third quarter results. However, the new JCP, centered around the shop concept, is gaining traction with customers every day and is surpassing our own expectations in terms of sales productivity which continues to give us confidence in our long term business model."
But so far, results have not been promising. For the quarter, comparable store sales declined 26.1 percent total sales decreased 26.6 percent and internet sales dropped 37.3%. Gross margin was also squeezed, falling to 32.5 percent from 37.4% of sales. One reason given from the gross margin decrease was the impact of clearance sales. Such sales, along with other promotions such as free haircuts, can’t help but confuse customers who are being told to expect everyday-low-pricing.