JC Penney (JCP) is fast becoming the industry leader in turning bad into worse. Today, the once dominant retailer reported a dizzying $586 million loss for the second quarter ending August 3rd.
This brings JCP’s total reported losses to $934 million, a considerable leap from the tally at this point last year of $310 million. Sales have plunged in the second quarter 11.9% and 14.2% for the year in total so far.
CEO Mike Ullman, lately embroiled in controversy as hedge-fund manager William Ackman publicly demanded his ouster, remains intransigently optimistic. “Over the last four months or so since I returned to the company, we’ve been focused on moving as quickly as possible to stabilize the business, not just financially, which we’ve made a meaningful progress on, but also operationally including merchandising, marketing, store experience, JCP.com as well as the leadership team,” he said.
The silver lining to JCP’s otherwise dark cloud, according to Ullman, is that they at least know what ails them with some clarity. He said the company “knows where the problems are. We know how to address them and we have the right plans and places to do the job successfully and get back on a path to return to profitable growth. It’s no secret that the company’s prior merchandising promotional strategies weren’t working. We had to make changes. But these changes take time and their financial implications whether in the form of additional markdowns, investments in additional inventory, or investing an additional staff store hours. We had to get back by listening and putting the customer first.”
Still, Ullman tempered his enthusiasm with a pragmatic concession that there are “no quick fixes to crack the errors of the past.” Part of the problem has been JCP’s consistent challenges with inventory. He said, “As I told you in May, coming into the second quarter, we’re going to be out of stock in key basic items for our customers which they trusted us to have when they came to JC Penney. We spent the last three months getting back in-stock and what the customers need and we fully expect to be in great shape by the fourth quarter.”