J.C. Penney Company, Inc. (NYSE:JCP) hosted an event today for analysts to show some of the changes which have taken place, since Ron Johnson became the new CEO. Bill Ackman handpicked Ron Johnson to run J.C. Penney Company, Inc. (NYSE:JCP), after becoming the company’s largest shareholder. Johnson had previously been in charge of Apple’s retail stores. Johnson is trying to turn JCP into a version of Apple Inc. (NASDAQ:AAPL). So far, the company has been suffering from declining revenue, as the new strategy is being implemented.
Analysts were very impressed by Johnson’s remarks. Shares of the company were up close to 10%, before closing at $29.09, nearly flat.
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Below are some of the highlights from the call in Ron Johnson’s words.
When we’re done, that will be the new JCP. And you’ve now felt it. But again, you’ve seen about 30,000 square feet. When we’re done, 130,000, 100,000-some number of square feet. 100 shops. All kinds of streets, you’ve got The Square.
We took in five groups of shoppers, turned out there was some skeptics on J.C. Penney Company, Inc. (NYSE:JCP), some neutral and some people that love JCP. We didn’t ask them in advance who they are. We said we want you to the come. The group started downstairs with a pre-tour perception of JCP. We asked one simple question, we’ve asked them for years. If you had to give three adjectives to describe JCPenney, what are they? Then they spent 90 minutes on a self and then a guided tour of the store, so they were here about 30 minutes longer than you might have been. And then as they left, we said, give us three adjectives to describe JCPenney you just experienced. Right? And this happened 12 days ago.
But here are the words that really stood out to me. It’s a store for kids and older people. It’s a little bit traditional. It’s old-fashioned. It’s for old ladies. It’s polyester. There’s overstuffed racks. I remember it from my childhood. It’s low-end, it’s discount, it’s outdated, I go there infrequently. There are no high-name brands. It’s disorganized.
That’s my favorite comment in the whole thing. We’re here, when I was at Apple Inc. (NASDAQ:AAPL), our goal was to enrich lives. It was using technology to help people get more out of themselves and out of their technology. Our goal here is to help Americans live and look better every day and we do that through the products we carry, the experiences we offer, through things like free haircuts, but that last comment, which said I felt valued, we don’t have to treat people like they’re poor, just because they’re on a lower-income budget. And if we can get that across to people, that’s magic. And I was pretty encouraged by that. So that’s the focus group.
Now, if you go back, that’s where we started. On the way out, we asked them tell us the words to describe JCPenney. And the list was here. Nothing’s out. Creative, sophisticated, not a lower middle-class store anymore, vibrant, organized, good value, trendy, updated, higher quality at lower prices, modern, fun, open, innovative. Wow. We spent 100 years building out the list on the left, in 100 minutes the perception changed.
It shows the power, in my opinion, of rethinking everything. It’s pricing, it’s products, it’s presentation, it’s place, it’s people. That’s the magic of reinvention. That’s the magic of transformation. That’s what we’re here, to create America’s favorite store. It ain’t going to be easy. But you can tell from them, I mean, I felt — I’ve watched a lot of these videos. Most of them were doing their focus group thing. They were a little bit smitten. You saw the sparkle in the eyes of a lot of people, and that’s pretty encouraging.
That gives us encouragement. A lot of encouragement. But the other thing that does is we have shop performance now. As you know, we started the year with two shops, Sephora and Mango. August 1, we added six more, and as of September 1, we had 12 shops. We now have 12 stores inside of J.C. Penney Company, Inc. (NYSE:JCP). You’ve been to our stores. You’ve seen them. We know how they’re doing.
We gave you a little bit of feedback on that in August, after the first 10 days. We’re now seven weeks into some of the shops. We’re three weeks into others. It’s way too early to draw conclusions. But we ought to be reading
We are selling fashion like we never have, new fits, that’s in the men’s area. In the women’s area, where we really took an approach, a curve idea some of their fashion, it is growing so fast it’s not really fair to give a comparison. But if you walk through, we’re out of stock, we’re chasing it. Both Levi shop for women’s and men’s are doing well above where we planned. Our IZOD shop just set three weeks ago. I think many have already talked about it. It’s off the charts. This is growing a little over 50% over last year’s IZOD. It has a little more space. So it should grow faster. It’s well above our plan.
Apple Inc. (NASDAQ:AAPL) went through 2002, I think it was, sales were down 38%, as we dreamed about becoming a digital device Company. But Apple invested during that downturn. That’s when Apple started to build its chain of stores, that’s when Apple transitioned to Intel, that’s when Apple started its App division, that’s when Apple imagined and built the first iPod. We went through that. The stock didn’t get up to where I joined until 2004. I spent 4.5 years at Apple, the stock lower than where I started, not a very good time for my wife. Why did we do this? But it worked out okay. But it wasn’t easy. Just like this isn’t easy. But transformation’s never easy.
Disclosure: The author of this article is long JCP, no other positions in any securities mentioned.