The reaction to the unveiling of JC Penney’s turnaround plan was marred by a revelation that third quarter sales had softened which led to its share price crashing.
The department store, which parachuted in former chief executive Mike Ullman last year after ex-Apple retail chief Ron Johnson’s transformation of the the retailer turned off customers, held an analysts day on Wednesday to update on his revival plan.
However, its admission that September’s like-for-likes were slower than expected at low single digit growth, compared to the mid-single digit growth projected, led to its share price plunging from $9.18 per share on Tuesday evening to $7.14 when the markets closed on Friday.
JC Penney said that the sales slowdown was due to lower levels of clearance compared to last year and the “continued difficult retail environment”.
Meanwhile, Ullman set out his growth plan for JC Penney, which involves trying to draw more women into store. It is revamping its shoe and handbag department and adding 30% of space to women’s footwear. Ullman forecasts these categories will add $1bn to sales in the next three years.
It will also looking to add $750m in its homewares business and is looking to maximise “the power, reach and integration” of its omnichannel business.
JC Penney also revealed it plans to achieve $1.2bn in EBITDA in 2017.