J.C. Penney Co. Chief Executive Officer Ron Johnson, reiterating that his turnaround of the department store chain will take four years, said hes sticking with his strategy for everyday low prices.
We do not believe in marking up goods beyond a fair profit, we will not mark things off 10, 15, 20 percent off, we do not do that type of business, Johnson said last week at the Fortune Brainstorm Tech conference in Aspen, Colo.
Johnson cited the effectiveness of the strategy for Wal-Mart Stores and Starbucks and for goods such as gasoline.
Johnson, the former retailing chief of Apple, has worked to transform J.C. Penney stores into collections of branded shops and instituted a three-tiered pricing system to wean customers off discounts.
The strategy has met with resistance from shoppers who crave coupons or are unfamiliar with the new look, contributing to a 20 percent decline in first-quarter sales.
Johnson recalled that Mickey Drexler, the CEO of J. Crew Group Inc. who engineered a turnaround at Gap earlier in his career, advised him to ignore criticism and to put your head down and do what you know how to do.
Its been interesting for me, watching all these analysts, they think its going to change overnight, Johnson said. We all forget these things, but transformation takes time – its not a sprint.
The chains plans to open more stores within its stores hit a snag this month, when a New York state Supreme Court judge granted Macys a preliminary injunction that will block Martha Stewart Living Omnimedia from working toward making, marketing and selling Martha Stewart-branded products in J.C. Penney stores.
Johnson, slated to conduct a presentation with Martha Stewart last week, spoke alone.
Penneys second-quarter sales trends may have softened from the first quarter because of an an inconsistent marketing message, said Deborah Weinswig, an analyst at Citigroup in New York.
Penneys, with more than 1,000 locations and $17.3 billion in sales last year, is expected to report second-quarter earnings Aug. 8.