JCPenney is officially in crisis mode.
Once one of the top department stores in America, the company has struggled to turn a profit since failed CEO Ron Johnson’s aggressive reinvention plan drove away more than a million of JCPenney’s customers.
Even though Johnson was fired in April, his legacy continues to haunt the business.
We toured some JCPenney stores in suburban New York with Brian Sozzi, chief equities strategist at Belus Capital Advisors, and took photos that show why JCPenney is struggling to survive.
“JCPenney’s rebirth is unfolding, but the huge issue is that it’s moving extremely slowly, causing inefficiencies at the store that diminish the promotional and marketing initiatives being undertaken by management to rebuild customer relationships,” Sozzi says.
Disorganization was a common theme at JCPenney. This clothing rack, which appears to have clothes for older women, is awkwardly placed in front of Joe Fresh, which is for younger women.
A cart of unattended hardware awkwardly sits in front of home goods:
And a piece of garbage sits on a display:
The cash register sits unattended in the shoe department, which Sozzi says could pose a security risk at the company. It’s also problematic because customers who want to buy something could end up changing their minds.
The new store layouts under Ron Johnson look modern, but fail to make the most of the space, Sozzi said. “JCPenney’s shops were constructed in a manner that reduces the amount of goods available for sale on the floor,” Sozzi said. “This is a major structural issue.”
We also see this at work with this Joe Fresh display, which takes up space that could be better utilized with racks of merchandise:
This sofa costs thousands of dollars, but because it’s encased in plastic, potential customers can’t even see it.
Same for this furniture:
Entire racks that should hold merchandise are completely empty.
This clearance rack contains pants and shorts for $US1.97. “I’ve never even seen prices that low,” Sozzi told us.
Some stores appeared in disrepair. This “Customer Service” sign is falling down. “How long until that falls down on a customer?” Sozzi said.
This carpet is shoddy and stained, which stands in stark contrast to the modernized shops in other sections of the store. “JCPenney is basically two companies: 500 remodeled stores and 500 un-remodeled stores (aka zombie stores), so consumers are seeing two different and confusing views of the brand,” Sozzi said.
These racks of merchandise are totally empty:
This display does nothing to draw shoppers in:
Then, there’s the matter of the overpriced home department. This bed set costs $US2,375 — an exorbitant sum for JCPenney shoppers. That price is better-suited to an upscale store like West Elm.
“JCPenney just isn’t moving items through the home store,” Sozzi told us. The lack of interest in home goods is evidenced by rows and rows of merchandise on clearance:
JCPenney can’t even get its logo straight. The store is full of mixed messages, evidence of the company’s many facelifts in recent years.
There’s the store sign:
A logo immediately upon entering the store:
And this credit card sign immediately upon entering the store.
“There is no consistency, rather an array of facelifts on display in the store that reflect failed attempts to revitalize a business that operates in a super competitive, low margin arena,” Sozzi says.
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