May 17, 2013, 1:44 PM

J.C. Penney’s chief promises to realign store and web inventory

That way employees will be able to draw on web stock to fill store orders.

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Five weeks after retaking the helm at J.C. Penney Co. Inc., Mike Ullman is reversing a number of the decisions made by his predecessor, Ron Johnson. And one of them was allowing the merchandise in stores to diverge from what was available on JCP.com.

“It was an organizational mistake frankly,” Ullman told analysts yesterday in a call to discuss the retail chain’s fiscal first quarter results. The problem, he said, was that store employees no longer could rely on JCP.com to fill an order if a customer could not find the item she wanted in a J.C. Penney store.

That’s because the retailer had separate buying teams, one for stores and the other for the e-commerce site. As a result, Ullman said, it was “hard to have confidence at the store level they can use dot-com to extend the sale or to help the customer solve size issues.” The company is now working to realign the merchandise available online and in stores, and Ullman said that should be accomplished by the holiday shopping season this fall. J.C. Penney is No. 34 in Internet Retailer’s recently released 2013 Top 500 Guide.

Ullman blamed the divergence of store and web inventory in part for the 32% decline in e-commerce sales last year. In 2012, total sales declined 24.8% as then-CEO Ron Johnson radically changed Penney’s marketing strategy, including doing away with the regular sales that had been a Penney hallmark. Johnson resigned in April and was replaced by Ullman, who had been Penney’s chairman and CEO for seven years until turning over the reins to Johnson in November 2011.

Other than saying he was “focused on making JCP.com a stronger component of our business once again,” Ullman had little to say about e-commerce. In fact, the company did not report first quarter web sales, a departure from past practice.

J.C. Penney did not respond to a question about why it did not report e-commerce sales in the first quarter.

What Penney did report showed Ullman has much to do to turn the company around. For the fiscal first quarter, which ended May 4, J.C. Penney reported:

  • Total sales declined 16.4% to $2.635 billion from $3.152 billion in the same period a year earlier.
  • Comparable-store sales declined 16.6%. The company operates some 1,100 stores in the U.S.
  • A net loss of $348 million, more than double the loss of $163 million a year earlier.
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