JC Penney Stock Price Drops Following President’s Abrupt Exit
In a statement issued late Monday, JC Penney gave no reason for the abrupt departure of Francis, a top Target executive who was brought in last October to help redefine the store’s brand.
On Tuesday, J.C. Penney shares fell 8.5% to close at $22.25. MarketWatch reports that the stock is down nearly 37% year to date.
According to the CS Monitor, Francis was responsible for marketing a new pricing plan in which the company replaced hundreds of coupons and sales events per year with lower everyday prices.
Ushering in the new plan, Francis launched an advertising campaign — featuring comedian Ellen DeGeneres — that was hailed as “hip” by experts.
Even though the new JC Penny ads were liked by customers, critics complained they failed to clearly explain the modified pricing plan to longtime shoppers that had grown accustomed to receiving coupons and markdowns.
The critics were spot on in their assessment and in May JC Penny saw a 20 percent drop in revenue as shoppers fled in confusion over the new pricing strategy.
“It is easy to lose core customers and much harder to win new ones. So, even if JCP were to be successful, success might not occur as fast as management had anticipated,” Gilford Securities analyst Bernard Sosnick said in a research note.
Since JC Penny’s bleak first-quarter earnings report, the company has been changing its advertising and marketing methods to better explain the three-tiered pricing strategy, which entails everyday prices 40 percent lower than a year ago, deeper month-long reductions on selected items and clearance sales the first and third Friday of each month, called “Best Price Fridays.”
“Our marketing, while it is gaining a lot of mind share, is not doing the work it (must) to communicate our pricing strategy and to drive our traffic,” Chief Executive Ron Johnson told investors last month.
With Francis’ departure, Johnson, who came to Penney from Apple Inc., will assume direct responsibility for and oversight of marketing and merchandising.
