J.C. Penney to bring back clearance sales in marketing revamp
Haven’t gotten used to J.C. Penney Co.'s Best Price system of setting prices on its merchandise yet? Don’t worry. It’ll change again next week.
Starting Aug. 1, the struggling retail company will bring back clearance sales and eliminate one of the much-ballyhooed three pricing tiers it introduced in February that has failed to improve sales.
The company introduced the three-tier pricing with the backing of new Chief Executive Ron Johnson, confusing many customers who were accustomed to seeing ads for Penney’s 590 sales a year.
Johnson’s approach called for lower everyday prices, monthlong sales and periodic sales events.
Penney is maintaining its “Every Day” low prices that are consistently 40% lower than what they were before the tiered pricing program began. Items marked Best Price will now be under Clearance, and Month Long deals will cease.
The company also plans to revamp its advertising to explain the pricing to customers.
Johnson, who joined the company in November after successful stints at Apple Inc. and Target Corp., proposed a new strategy, dubbed “fair and square,” to revive sales by simplifying pricing, replacing the steady stream of sales.
The approach hasn’t seemed to work.
The department store giant lost $163 million, or 75 cents a share, in its first quarter that ended April 28. Revenue was down 20.1% to $3.15 billion. At the same time, the company said it had experienced an 18.9% drop in same-store sales compared with the first quarter of 2011.
In June, an executive in charge of merchandising, marketing and product development left the company amid declining sales.
Penney shares rose 21 cents to $22.21 but are far below their 52-week high of $43.18.
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