The week ahead

Tom Hudson: JCPenney is facing a hard sell

 

Special to The Miami Herald

It’s probably been a long time since you shopped at JCPenney. That’s the case for most of us. But for the sake of its employees and shareholders, it needs to figure out how to bring buyers back. And soon.

Few retailers exemplified Middle America like JCPenney did. It was affordable and focused on fashion. It didn’t have the appliances or hardware like Sears. It didn’t offer couture. It was sweaters in the fall and shorts in the spring. It relied on sales gimmicks and promotional pricing to lure in budget-conscious buyers. Until it didn’t. But now it does again.

This inconsistent strategy will be on display when the retailer reports first quarter results Thursday afternoon. Already, the company has fired the CEO responsible for the results.

Three years ago, JCPenney sold almost $4 billion worth of merchandise during its first quarter. The company already has warned that this year’s sales will be just over $2.5 billion. For every $3 shoppers were spending at Penney’s stores in 2010 they are now spending just $2.

Fast fashion stores like H&M and Zara are taking younger shoppers. Kohl’s and Target have better product images. JCPenney has the financial resources to turn itself around. The company has $1 billion left on a new credit line. It needs it as it hasn’t made a profit from the business of selling clothes in two years. It also needs a plan to give shoppers a reason to come back and shareholders an excuse to stick around.

Tom Hudson is a financial journalist based in Miami. He is the former co-anchor and managing editor of Nightly Business Report on public television. Follow him on Twitter @HudsonsView.

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