Analysts who are getting out into J.C. Penney stores are finding some positive signs.
Oppenheimer & Co. issued a note Monday saying Penney’s recent promotions are showing “evidence of success.”
“We are increasingly optimistic that the more price promotional stance that J.C. Penney is now assuming will allow the chain to make the most of a challenging holiday selling season and position it well to re-accelerate its aggressive turnaround strategy in 2013,” the note said.
Analysts Brian Nagel, Rupesh Parikh and Erica Eiler spent the weekend visiting Penney stores in the New York and New Jersey area. J.C. Penney is based in Plano, Texas.
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They found store traffic remained consistent with other December visits and significantly better than in prior months.
Markdowns were more aggressive. Clearance inventory was selling better, and some racks were cleared out.
“A move back to more aggressive price promotions represents a clear deviation from the strict EDLP (every day low price) strategy initially outlined by CEO Ron Johnson. That said, we think a hybrid promotional effort will improve cash generation and serve as a more steady traffic driver for JCP,” the note said.
Johnson has been modifying pricing and marketing with more signs reflecting price cuts on merchandise throughout the store in addition to items that have been moved to the clearance racks.
The big question: Will there be enough measured improvement in sales to calm investors, keep the board happy and give Johnson’s team time to work out their transformation?
Former Penney CEO Myron “Mike” Ullman used to say that Penney stores always did well during what he called “appointment shopping.” He used the term to describe shoppers’ habits of returning to the mall en masse for key periods such as back-to-school, Mother’s Day and of course, Christmas.