JCPenney's CEO used a high school dating analogy to describe the worst time in the company's history
"This company has had some difficult times in our recent history," CEO Marvin Ellison said at the WWD Apparel & Retail CEO Summit in New York City on Wednesday.
"I simply called it 18 months in the wilderness," he added. "And that is what happened with a failed leadership transition and a strategy that did not resonate with customers."Ultimately, Ellison attributed the company's decline to how JCPenney abandoned is target demographic - mid-tier customers - and vied for a more a upscale clientele. The company's former CEO, Apple and Target executive Ron Johnson, famously did away with the discounts the company was known for.
This backfired terribly, with sales slumping as much as 40% in a quarter.
Ellison made an analogy to illustrate how painfully misguided the mistake was.
"Let's go back to high school and imagine that you dated the same wonderful girl for three years, and all of a sudden, when the prom is going up, you decide that she's no longer good enough ... so you make a play for the homecoming queen, and the homecoming queen says, 'no thank you,' and so you end up going to the prom stag," he said. "JCPenney had a customer that loved us, and we said to the customer , 'we don't like you anymore.' We said we like that [other] customer. We made a play for that customer, and that customer said, 'we don't like you very much.'"
He understands his clientele now.
"I've come to understand, to appreciate and embrace mid-tier customers ... the lives and the plight that they face on an economic standpoint," Ellison said, adding how his own background - growing up in western Tennessee and earning an hourly wage for part of his life - informs this knowledge.Sales grew 4% in the most recent quarter.
Ellison illustrated some improvements the company has already made, including its partnerships with Sephora and InStyle. He remained confident about JCPenney's private brands, like Liz Claiborne, Arizona Jeans, and Worthington.
One thing JCPenney is not abandoning is its promotional environment.
"We're going to be competitive, and we're going to promote," Ellison said. "Our mid tier customer segment still values that promotional cadence. One of the key lessons learned in the 18-month failed strategy is 'promotions resonate with this customer.'"