On-the-ropes retailer JCPenney (NYSE:JCP) is now being accused of asking its suppliers to make up high suggested prices so its discounts look better.
Unnamed sources are accusing CEO Ron Johnson of pressuring manufacturers “to concoct phony suggested retail markups for their clothing,” according to The New York Post. Many manufacturers don’t even traditionally suggest prices, but JCP is asking them to do so in writing so it can back up its discounts and highlight them — usually via signs in the stores.
The action is surprising given Johnson’s move to a new “fair and square” pricing last year. Johnson’s original idea was to set aside the idea of presenting items as marked-down because he believed it decreased the reputation of the JCPenney brand.
If the store is moving away from the “fair and square” pricing structure, it will be in the wake of some disastrous results. The company has had to cut employees and seen its outlook downgraded. JCPenney’s stock has declined more than 50% in the last year.