What Is Important in the Financial World (3/27/2013)

J.C. Penney Co. Inc.’s (NYSE: JCP) CEO Ron Johnson is either lowering prices on much of the troubled retailer’s store inventory or raising those prices instead. Most analysts believe neither path will work because consumers have deserted J.C. Penney’s permanently for other department stores like Macy’s Inc. (NYSE: M) big-box retailers like Target Corp. (NYSE: TGT). According to The New York Post:

JCPenney CEO Ron Johnson has quietly begun to hike prices across the company’s stores, The Post has learned.

It’s a humiliating about-face as the former Apple exec scrambles to restore the traditional sales events he ditched last year.

The increases are significant, as prices return broadly to previous levels before Johnson slashed them in his “fair and square” initiative. The push permanently lowered prices while eliminating sales events and coupons in February 2012, sources said.

New T-Mobile Offerings

T-Mobile began to offer its “no contract” phone plan and said it will sell the Apple Inc. (NASDAQ: AAPL) iPhone 5 starting next month. A debate has begun about whether the program will draw customers of AT&T Inc. (NYSE: T), Verizon Wireless and Sprint Nextel Corp. (NYSE: S). One factor that could hurt T-Mobile is that its 4G network is only deployed in a few locations around the country. Then there are the penalties customers may incur if they cancel their plans with T-Mobile rivals in order to take advantage of the “no contract” feature. According to The New York Times:

[I]t may not be enough to persuade smartphone users to abandon the competition.

Analysts said the new marketing strategy, which spreads the cost of a new phone over two years as a separate line item on the monthly bill, will still feel like a commitment to many customers, even if they can choose to pay it off early and walk away. And T-Mobile, which has a slower network than its competitors, is only just beginning to introduce major upgrades.

Walmart Fesses Up

Wal-Mart Stores Inc. (NYSE: WMT) owned up to the fact that investigations into bribery allegations, particularly in Mexico, could cost it a great deal of money. In its 10-K, the retailer said:

We cannot predict at this time the outcome or impact of the government investigations, the shareholder lawsuits, or our own internal investigations and review. Moreover, we expect to continue to incur costs (in addition to the $157 million of costs incurred in fiscal 2013) in conducting our on-going review and investigations and in responding to requests for information or subpoenas seeking documents, testimony and other information in connection with the government investigations and in defending the existing and any additional shareholder lawsuits and any governmental proceedings that are instituted against us or any of our current or former officers. These matters may require the involvement of certain members of our senior management that could impinge on the time they have available to devote to other matters relating to our business.