Exec Spills Addiction Shared by JCPenney HQ Employees

by Christopher Freeburn | February 26, 2013 11:03 am

JC Penny 1 300x199 Exec Spills Addiction Shared by JCPenney HQ Employees[1]In an interview with the Wall Street JournalJ.C. Penney (NYSE:JCP[2]) COO Michael Kramer, said that before former Apple (NASDAQ:AAPL[3]) executive Ron Johnson was hired to helm the chain’s turnaround, J.C. Penney’s corporate culture was “pathetic.”[4]

For instance, Kramer, who was also recruited from Apple, noted that the 4,800 employees at the store’s headquarters used 35% of its bandwidth for recreation, watching as many as five million videos posted on Google‘s (NASDAQ:GOOG[5]) YouTube in one month.

Under Johnson, headquarters staff has been trimmed by 1,600.

However, Johnson’s most ambitious strategy, ditching the store’s frequent sales and discounts has fallen flat with consumers[6]. Kramer noted that management had expected sales decline of between 10% and 12% in the first quarter of last year, as the sales disappeared. In fact, sales fell 20% during the first quarter and 23% in the next quarter.

Faced with continued sales declines, and rising pressure from shareholders, Johnson has relented and the chain has begun to promote sales again[7].

Shares of J.C. Penney fell more than 2% in Tuesday morning trading.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/05/JC-Penny-1.jpg
  2. JCP: http://studio-5.financialcontent.com/investplace/quote?Symbol=JCP
  3. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  4. J.C. Penney’s corporate culture was “pathetic.”: http://online.wsj.com/article/SB10001424127887324338604578324431500236680.html
  5. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  6. has fallen flat with consumers: http://investorplace.com/2012/05/jcpenney-turnaround-turns-ugly-jcp/
  7. and the chain has begun to promote sales again: http://investorplace.com/2013/01/j-c-penney-brings-back-sales-to-win-back-customers/

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