As we said earlier this morning, this free haircuts promotion is just another smoke-and-mirrors effort to regain customers since Ron Johnson joined as chief executive after a stint as head of retail at Apple Inc. (NASDAQ: AAPL). Johnson revamped merchandise pricing almost immediately after his appointment, but sales at JCPenney dropped more than 20% in the first reported quarter afterward.
Despite its lack of success, Johnson trumpeted a modified version of the plan again less than a month ago when the company released more bad earnings:
“We have now completed the first six months of our transformation and while business continues to be softer than anticipated, we are confident the transformation of jcpenney is on track. The transition from a highly promotional business model to one based on everyday value will take time and we will stay the course,” said jcpenney CEO Ron Johnson. “This month we simplified our pricing, launched the first of our new shops, and accelerated our marketing efforts to focus on brands, products and value. Early response to these efforts has been very encouraging.”
The quarterly numbers gave no support for the success of any transformation.
However, August saw a sudden surge in insider buying after four years. A director and CFO Michael Kramer cumulatively bought more than 7,200 shares, worth more than $170,000, either to take advantage of the company’s good valuations or as a way to help restore investor trust in the company’s prospects.
Still, the view from here is that the fact that free haircuts are considered a big deal at JCPenney is just another sign of how much the retailer is grasping at straws.
After opening at $28.54, shares were down as far as $28.16 in early trading. The 52-week range is $19.06 to $43.18, and the share price is more than 24% lower than six months ago.
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