NEW YORK (AP) -- J.C. Penney's stock fell again on Monday as worry spread about the department store chain's ability to turn itself around.
Penney, based in Plano, Tex., announced a week ago that Michael Francis, a former top Target Corp. executive brought in last October to help transform the brand, had left.
As president, Francis was responsible for marketing a new pricing plan that the company says replaced hundreds of sales events per year with lower prices overall as of Feb. 1. Francis also oversaw merchandising and product development and played a big role in signing up new brands like Michael Graves and Vivienne Tam as part of larger plan to transform the company under its new CEO, Ron Johnson.
The abrupt departure is the latest bad news for Penney, which last month reported a bigger first-quarter loss than expected and a 20 percent drop in revenue as shoppers fled in confusion over the new pricing strategy.
During presentations at a recent industry conference this month and following the earnings report, Johnson has backed his pricing strategy, saying the problem was that Penney's marketing didn't clearly spell it out. The company has been changing its ads and marketing to better explain the three-tiered strategy, which entails everyday prices 40 percent lower than a year ago; deeper month-long reductions on selected items; and clearance sales called "Best Price Fridays."
Penney plans to add clearance events — in addition to those on the first and third Friday of each month — though it has declined to elaborate. And it will clarify in new ads that clearance events end when merchandise runs out.
After Francis's exit, Johnson assumed direct responsibility for and oversight of marketing and merchandising. Charles Grom, a retail analyst at Deutsche Bank, wrote in a note to investors Monday that Francis's departure was a material blow to Penney
"(We) see it as further evidence that the turnaround will be much longer in duration," Grom wrote, saying it could take "years, not quarters."
Penney isn't slated to report second-quarter results until mid-August, but some analysts already are saying business has remained tough. Bernard Sosnick, an analyst at Gilford Securities, told investors last week that he based his gloomy view on visits to various J.C. Penney stores.
"I don't see people in the stores," he said in an interview.
The stock was down $1.06, or 4.7 percent, to $21.50 by midday.
Penney's shares soared last winter after Johnson laid out the new pricing strategy; they hit a recent peak of $43.13 on Feb. 9 but have since lost almost half their value. Since Penney announced Francis's exit after the markets closed June 18, the share have fallen 7.3 percent.
