Struggling department store chain J.C. Penney Company, Inc. (NYSE:JCP) is about the roll out a new pricing strategy that involves discounts through sales and coupons. The Plano, Texas-based company has been changing price tags since the beginning of this month, and will complete the process within a few weeks, according to Fox Business.
The ailing retailer said it now understands that promotions and discounts motivate consumers. To bring occasional promotions and discounts, the company will increase the prices of its merchandise. For example, the company spokesperson told Reuters, the Arizona T-shirt that was priced at $5 under the “everyday low price” will now have the tag of $6, allowing the company an opportunity to declare a sale. Earlier, the company CEO Ron Johnson had launched “everyday low prices” in an attempt to revive J.C. Penney Company, Inc. (NYSE:JCP)’s fortunes. But the strategy failed miserably as the retailer continued to lose customers.
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Along with increasing sales, the company said its new move will help improve profit margins. J.C. Penney Company, Inc. (NYSE:JCP) has faced widespread criticism for its lengthy and unsuccessful (at least so far) turnaround strategy. Analysts believe that none of the strategies are going to work for the retailer as consumers have permanently deserted its departmental stores for other stores like Target Corporation (NYSE:TGT) and Macy’s, Inc. (NYSE:M).
Chief executive Ron Johnson finally admitted that the “everyday low price” was a big blunder. Johnson launched the “everyday low price” strategy in February 2012 by ending the sales events and coupons. Hedge fund manager Bill Ackman is long on J.C. Penney Company, Inc. (NYSE:JCP). He hired Ron Johnson, former head of marketing at Apple Inc. (NASDAQ:AAPL), to change the company’s fortunes.
But the company has fallen flat on all expectations. After J.C. Penney announced a 25 percent decline in annual revenues and a loss of $985 million, its second biggest shareholder Vornado Realty Trust (NYSE:VNO) dumped 40 percent of its shares in the company. Bill Ackman still owns 39.1 million shares or 17.8 percent stake in the company.
J.C. Penney Company, Inc. (NYSE:JCP) shares were down 1.60 percent to $14.76 at 11:46 AM EDT.