Breakout

Shoplifting Hits J.C. Penney's Quarter

Jeff Macke
Breakout

More people are going to J.C. Penney (JCP) lately, unfortunately a lot of them are thieves.

CEO Myron “Mike” Ullman told analysts that inventory “shrinkage” in J.C. Penney exploded in the third quarter, hitting gross margins by 1.1%, more than what was seen in the prior 3 months.  Based on the income statement, that suggests that the amount of inventory that simply disappeared from the stores grew by more than $300,000 during the period.

Ullman blamed the loss on J.C. Penney’s replacement of clunky sensor security tags to a more modern radio frequency, or RFID method of inventory tracking.  The sensors had to go because they interfered with the RFID system.  Apparently it was easier for shoplifters to walk off with product without having paid during the transition process.

Shrinkage is just an industry term for products that somehow disappear between the time a retailer buys it, and when it gets rung up at the register.  According to industry estimates about 20% of all shrinkage can be blamed on bad bookkeeping or crooked vendors. The rest is assumed stolen.

The National Retail Federation says thieves made off with more than $20 billion worth of product in 2011.  Shoplifters get the blame, but the NRF says employees were to blame for almost $15 billion of property stolen that year.

Industry-wide shrinkage accounts for 1.5% of all products sold every year on average.  J.C. Penney’s shrinkage rose by nearly that much in the 3rd quarter alone.  It’s a stunningly high price to pay for transitioning to an RFID system that’s already more expensive than what it replaced.

When J.C. Penney chose to implement a return policy that didn’t require receipts in the middle of the switch to RFID, it became open season for shoplifters and crooked employees.  With much of the store inventory untagged, thieves had the choice of taking product straight out the door or going straight to the cash register for a gift card of the same value. 

After massive layoffs and a 70% drop in the stock price over the last two years, employee morale at J.C. Penney is so bad the company reportedly sought out the help of therapists last summer. 

Based on the spike in theft, it looks like at least some workers decided on a different sort of therapy to lift their spirits.  Regardless of what happened to the missing product, it’s safe to say J.C. Penney still has plenty of work to do on improving day-to-day operations.

View photo

.

Rates

View Comments (312)

Recommended for You

  • British couple walled into French home by 'neighbours from hell'

    A British couple's dream of a quiet retirement in the sun of southern France turned into a nightmare when their neighbours walled them into their home. Locals in the village of Brugairolles in the foothills of the Pyrenees were so appalled by the immurement, they rose up to rescue the elderly…

    AFP
  • Best Anti-Aging Creams 2014

    Mom reveals simple wrinkle solution that has researchers very excited. Try this free solution today to look and feel years younger.

    AdChoicesBellaLabs.comSponsored
  • Rihanna Takes Short Shorts To New Heights

    Summer days are hot in New York City and Rihanna knows that keeping cool may require some very specific wardrobe choices.Rihanna stepped out in a pair of cutoff denim shorts with slits on the sides and a crop top while out in the Big Apple on Tuesday, Aug. 19. The 26-year-old wore the outfit for a…

    Huffington Post
  • Reporter’s Execution Could Unleash U.S. Against ISIS

    The release Tuesday  of a shocking video showing the brutal beheading of American journalist James Foley by a representative of the Islamic State may wind up backfiring on the Islamic fundamentalist movement that has taken over much of Iraq in recent months. “Obama authorized military operations…

    The Fiscal Times
  • Grouper Eats Shark in One Bite in Viral Video

    With Shark Week on the Discovery Channel just ending, it's understandable that you may have the carnivorous fish on the mind and think that such a dangerous predator should be avoided at all costs. A certain grouper clearly didn't think so. In this video, which was featured on the front page of…

    Trending Now
  • View

    The peaceful side of the Ferguson protests (13 photos)

    Nightly chaos in the St. Louis suburb is getting all the attention, but the vast majority of those protesting have been peaceful. Here's a look at the some of the moments that are not making the front pages. (Yahoo News) Find more news related pictures in our photo galleries and follow us on Tumblr.

    Yahoo News
  • Kevin Frazier Named ‘Entertainment Tonight’ Co-Host, Louis Aguirre Hired for Vacated ‘Insider’ Slot

    Kevin Frazier is heading to “Entertainment Tonight.” Frazier, previously co-anchor and managing editor of syndicated magazine “The Insider,” is moving to “Entertainment Tonight.” Frazier (pictured above) will co-host with Nancy O'Dell beginning Sept. 9. As reported exclusively by TheWrap last…

    The Wrap
  • Do not pay your insurance bill until you read this

    If you drive less than 55 miles/day OR have no DUI's you can get auto insurance for as $29/ Month! See if you qualify

    AdChoicesAuto Insurance DiscountsSponsored
  • Elizabeth Vargas and Marc Cohn Divorcing While She Remains in Rehab

    Following Sunday's news that Elizabeth Vargas checked back into rehab, People reports that the 20/20 co-anchor and her husband, singer-songwriter Marc Cohn, are divorcing. "Marc and Elizabeth are in divorce proceedings," a source told the magazine. "The kids are with him in New York while she seeks…

    Yahoo Celebrity
  • Wozniacki upset by Giorgi at Connecticut Open

    Four-time champion Caroline Wozniacki was upset 6-4, 6-2 Wednesday by Camila Giorgi of Italy in the second round of the Connecticut Open. Giorgi, who beat Wozniacki in last year's U.S. Her first serves reached 117 mph and her second serves hovered around 107 mph. She consistently hit ground strokes…

    The Associated Press
  • Fox News host: 'History of Islam' shows a 'bullet to the head' is 'only thing these people understand'

    Fox News host Andrea Tantaros on Wednesday appeared to suggest that the recent actions by the Islamic State of Iraq and Syria were typical of Islamic behavior stretching back hundreds of years, arguing that the "only thing these people understand" is a "bullet to the head."

    The Week (RSS)
  • Spider-Woman isn't good for women when she looks like this

    Earlier this summer, Marvel could do no wrong. In the span of a week, the company announced that it was turning Thor, one of its iconic heroes, into a woman and that it would be turning Captain America into a black man. This week, the company appears to have made a misstep.

    Vox.com
  • This one fact alone will make you insanely jealous of Google employees

    Why do people love working at Google so much? There seem to be many reasons and one of them is without a doubt the fact that Google showers its employees with perks when they come into the office every day. Business Insider has scored an interview with Google’s former executive head chef Nate…

    BGR News
  • A Last Look at Atlantic City’s Failed Revel Casino

    Revel, the sleek, stylish $2.4 billion beachfront resort that opened in April 2012, will close its doors at 11am ET on Monday, Sept 1. Here's a last look at the property before it's gone.

    Yahoo Travel
  • Insurance for Cars Used Less Than 35 Miles a Day

    If you are currently insured, drive less than 35 miles/day or have no DUI's, you qualify for the lowest possible insurance rates offered in the U.S.

    AdChoicesComparisons.orgSponsored
  • Barack Obama refused to save a 'Saturday Night Live' sketch about racial profiling

    The Hollywood Reporter has an excerpt from the updated edition of Live From New York: An Uncensored History Of Saturday Night Live. Much of the piece focuses on politics — of Hillary Clinton's "entitlement" or the reaction to impressions like Sarah Palin and George W. Bush. Robert Smigel, writer:…

    The Verge
  • View

    The VMAs' Most Surprising Best New Artist Snubs (19 photos)

    The MTV Video Music Award for Best New Artist has been around since the first annual VMAs in 1984. However, despite years of practice, voters still frequently go a little crazy and allow a one-hit wonder to sneak away with the trophy that could (and probably should) have been won by the likes of…

    Yahoo Music
  • Hottest Trainer 2014: Hottest Trainer Contestant #8: Megan Johnson

    Images via Raquel Zaldivar No one struts it down a slackline like Megan Johnson, our final Hottest Trainer contestant. Not only is she the co-founder of Slackroduo, a fitness brand she created with...

    Racked Miami
  • Anna Wintour accepts the ALS ice bucket challenge and it is epic

    Countless celebs have taken part in the ALS #icebucketchallenge and over $13 million has been donated so far... but this one might just be our favorite!%Slideshow-1616%This is epic. You probably know all about the ALS #icebucketchallenge that's sweeping the country right now -- hundreds of your…

    StyleList
  • Oil ‘super spike’ is coming: Dan Dicker

    Dan Dicker of MercBloc on why cheap oil could trigger a 'super spike' in oil prices

    Yahoo Finance
  • World's luckiest man crashes motorcycle like a boss

    The invention of the dash cam and its mandatory status on Russian vehicles has produced some of the most hilarious, terrifying, down-right crazy videos the internet has ever seen – and that includes this amazing compilation of fails.

    Motoramic
  • Knee & Shoulder Relief

    Doctors speak out about knee & shoulder relief.

    AdChoicesInstaflexSponsored
  • Mariah Carey And Nick Cannon Split Rumors Swirl

    The latest celebrity split rumor from the Hollywood gossip mill claims Mariah Carey and Nick Cannon are headed for a breakup. The New York Post's Page Six reports Carey and Cannon are "living separately." She has allegedly suspected him of cheating and even hired security guards to make sure he…

    Huffington Post