In a recent post about JCPenney's performance, Neil Saunders shared a graph of the company's revenues since 1973. To more clearly understand what's going on at JCP and where it is on its lifecycle, I stripped out Eckerd Drug's revenues (they sold it off in 2003) from the whole dataset (using some conservative assumptions) to analyze JCP's core retail business over time - the result is the attached chart. Without Eckerd's revenue, this graph vividly illustrates the lifecycle of JCPenney’s core business (across catalog, stores and eCommerce). It's easier to see the transitions between the lifecycle stages and how the business has thus far managed to prolong its stay in the Decline stage over the past 11+ years. 1973–1990 (Introduction to Growth): Revenue grows steadily from $4.0B to $8.0B, reflecting store expansion and catalog success. 1991–2006 (Growth to Maturity): A sharper rise to $15.9B in 2006, driven by e-commerce (exceeding $1B by 2005) and post-Eckerd sale focus on core retail. 2007–2013 (Maturity to Decline): A decline begins in 2008 ($14.7B), with a dramatic drop to $9.7B in 2013 (-24.77%), tied to Ron Johnson’s failed pricing strategy. 2014–2019 (Decline Stabilization): Recovery to ~$11B by 2018, but never regaining its 2006 highs. 2020–2024 (Deep Decline): A steep fall to $8.5B in 2020 (bankruptcy, 154 store closures) and further to $6.5B by 2024, reflecting competition from Amazon, Walmart, and many others.
David Marcotte
9mo
John B. R. Long i did a fair of technology work with the company late 90's and 2000's and found them to be one of the few catalog players [please recall that was a major channel] that made a profitable transition to online in-store fulfillment. They had a strong product mix of home goods, better quality apparel and we're the preferred business attire source not least the Stafford brand. But international investment, negative margins on shipping, and losing the credit card advantages started the decline, which led to the weird move to Ron. I think an analysis that leaves out the above is lacking Steve Dennis
Glory N.
9mo
Thanks for sharing! In an era where market entry is relatively easy thanks to social media, the abundance of substitutes, and customers (seemingly) placing importance on customer service, shouldn't we expect revenue to continue declining until one of these factors significantly changes? This is the new normal--stores closing, etc. So the model for department stores should be reimagined---- maybe coming up with ideas that focus on leveraging space, location, accessibility, distribution channels, providing services that don't require inventory & yes, still selling products but limiting categories, focusing on quality and speed to market. There are other complex factors that I didn't mention and systemic issues take time & money to fix, but overall why do you think Penny's, Macy's and other chains have been slow to reimagine the department store model when that's exactly what economic forces are calling for?
Steve Dennis
9mo
While Ron's tenure sure didn't help, the decline in moderate department stores is highly correlated with the dramatic expansion of off-price outlets and specialty beauty, and, to a less degree, the growth of e-commerce more broadly. Kohl's and Macy's curve doesn't look a lot different. #deadbrandswalking
• Bob Phibbs
9mo
One point left out from all these excellent comments was featured in I believe The Robin Report one time that the biggest fall came when they decided to move headquarters from New York City to Plano Texas. A lot of the people that knew the market, could predict colors, styles, home goods said no, we’re not moving. that brain drain led to a lot of the averageness that Steve Dennis talked about. And Ron Johnson was the worst thing ever.
For some timeline context.. The giant revenue drop 2011-2012 was much more tied to destroying the product assortment than the pricing strategy. Price got the headlines though. At that time JCP completely removed most of the differentiated private brands that drove traffic, margin and top line sending core customers elsewhere and bringing in some name brand products that didn’t necessarily fit the consumer who did shop there and were readily available at many retailers. The removal of St.Johns Bay and Arizona was close to a two billion dollar hit alone. The flat period after was helped by reintroducing many of those private label brands. Then Steve Dennis has all the talking points for what happened over the next decade + (All this can also be validated by public information.) Required blurb: All opinions are my own and don’t necessarily reflect those of my employer.