3/01/13

Penney books double-digit losses for 2012, including online

Online and comparable-store sales fall by 32% and 25%, respectively.

Bill Briggs , Senior Editor

J.C. Penney Co. Inc. suffered dismal sales across the board for 2012, led by sagging e-commerce results. Online price competition and the flagging performance of Penney’s home products, in-store and on the web, were the chief culprits, CEO Ron Johnson told Wall Street analysts on the company’s year-end earnings call Wednesday.

For the 2012 fiscal year ended Feb. 2, J.C. Penney, No. 20 in the Internet Retailer Top 500, reported:

The web represented 7.9% of total sales for 2012, compared with 8.7% in 2011.

Web sales for Penney were a disappointment, Johnson told analysts. “For the fourth quarter they performed pretty much as they have all year, slightly behind our store sales,” he said. There were two primary reasons for that, Johnson said. “One, the Internet, as we all know, is the most promotional field in retail today. People compete and go online and compare prices and buy things primarily based on price and delivery and other things. That makes it hard.”

The second reason was that JCP.com is dominated by home products, which is about 50% of Penney’s overall business, Johnson said. The home business suffered as the company began a transition in January 2012 to a new strategy–The Shops–designed long-term to transform J.C. Penney into a specialty department store online and in stores. The strategy includes permanent discounts and specific marketing and merchandising programs.

Penney has embarked on changes to its web site, but Johnson didn’t offer specifics. New product line launches, from Martha Stewart and Jonathan Adler, and Sir Terence Conran, and an expanded furniture selection, are expected to grow Penney’s home business and then sales online will begin to exceed store sales, he said. “We are committed to growing our online stores faster than our store sales in the years ahead,” Johnson told analysts.

For the fourth quarter:

The web represented 8.1% of total sales for Q4, compared with 8.9% in the same quarter last year.

Penney incurred a charge of $148 million related to lump-sum settlements from its primary pension plan chosen by employees who left the company last year. The chain retailer also booked $298 million in restructuring and management transition charges. In June, Michael Francis resigned from his job as president after less than a year, leaving Johnson to take his place.

Topics:

2012 earnings, J. C. Penney, JC Penney, mass merchant, Michael Francis, Penney, Penney CEO, Q4 2012 earnings, Ron Johnson, Top 500, web sales decline

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