Then again, nothing surprises me anymore...
Both these articles were published Thursday. As you read the first one, don't miss the part about how "the change in strategy could be expensive," and then the part about the "deep loss."
In the second article, bear in mind that the average JCP store employee makes less than $20K PER YEAR; the quoted figure is for ONE TRIP.
Is it any wonder that company is in trouble?
JC Penney Says Turnaround Could Take Longer
Published: Thursday, 21 Mar 2013 | 5:50 AM ET
By: Reuters With AP
J.C. Penney said in an annual report filed that fixing its performance could take more time than initially expected, and it suggested that any change in strategy could be expensive.
The company also said Wednesday that bondholders who claimed that the department store chain was in violation of a bond agreement have withdrawn their notice of default, a move that eases some pressure on the struggling retailer.
Penney launched a turnaround last year that did away with most coupons and discounts. It also has opened the first "shops within its stores" on its way to 100 boutiques at most stores.
But sales declined 25 percent in the last fiscal year as its price-conscious shoppers balked at the new promotional strategy, and the department store reported a deep loss.
Credit Markets Worried About JC Penney
Jonathan Salem Baskin, author of "Branding Only Works on Cattle," explains whether JC Penney's Joe Fresh line can save the retailer. "The problem is that Joe Fresh isn't the next iPhone," he says.
"It may take longer than expected or planned to recover from our negative sales trends and operating results, and actual results may be materially less than planned," Penney wrote in its annual report for the fiscal year ended Feb. 2.
The company has backtracked partially on its pricing and brought back coupons in a bid to lure back shoppers.
(Read More: JC Penney Shares Jump on Joe Fresh 'Brightspot')
Penney, set to launch a new home section next month, said it may need to change its shops plan, but warned that could be expensive and could confuse shoppers.
"Any changes to our strategies could be substantial, and if implemented, could result in significant additional costs," the company wrote in the report filed with the Securities and Exchange Commission.
The company also said Wednesday that bondholders who claimed that it was in violation of a bond agreement have withdrawn their notice of default.
The struggling retailer filed a lawsuit last month to block the claim after receiving a letter from a law firm that represented more than half of the holders of the company's 7.4 percent bonds that are due in 2037. The law firm contended that Penney violated an inventory-secured credit agreement in January 2012 without providing security for the bondholders.
The bondholders threatened to make Penney repay the $326 million owed unless it took steps to fix the alleged violations within 90 days. That created concern among investors worried that forcing Penney to make accelerated debt repayments would strain its finances.
The withdrawal of the notice offers a bit of relief for Penney. The chain just finished a year of mounting losses and declining sales amid a transformation plan led by CEO Ron Johnson that has turned off shoppers.
Story #2:
JC Penney's $41,817 executive commute
At least 9 of the retailer's top bosses live remotely and get a company plane to shuttle them to Texas HQ.
beleaguered retailer J.C. Penney (JCP -0.64%) has laid off thousands, seeking to cut costs as an ill-fated makeover plan has faltered. But the company is also spending sky-high amounts on ferrying top executives between their homes and its headquarters, according to Bloomberg.
At least nine of the company's top key executives live a plane ride away from Penney's Plano, Texas, headquarters, including Chief Executive Officer Ron Johnson (pictured) and Chief Creative Officer Michael Fisher.
The retailer pays for the commutes of all the executives, including a construction executive who lives in Boston and a design-and-trends employee who lives in New York, Bloomberg said. The company's head of human resources is also among those commuting from California.
Many of these executives formerly worked at Apple, from which Johnson was recruited.
The company has three jets registered to it, two Gulfstream G450s and one Gulfstream G-IV, according to the Federal Aviation Administration.
Operating a Gulfstream jet isn't cheap: A round-trip flight between Dallas and San Jose, Calif., adds up to a whopping $41,817, according to a quote from private-jet company Starbase Jet, as cited by Bloomberg.
Aside from the cost of paying for the executives' cross-country commutes, many of them also don't spend the entire week in Texas. The Penney execs who live in California, for example, fly out of Texas on Thursdays and work from their home state on Friday.
"To have them not be there on a regular basis I think sends a very, very bad message," Howard Gross, managing director of retail and fashion practice at executive search firm Boyden, told Bloomberg. Such telecommuting arrangements have come under debate recently, with Yahoo Chief Executive Marissa Mayer banning staff from working from home.
CEO Johnson's work arrangements have been detailed before, as written by my colleague Jonathan Berr. Johnson works four days a week at its Plano headquarters, then returns to California in his corporate jet. While in Texas, he stays at the luxurious Ritz-Carlton hotel.
Meanwhile, shareholders of J.C. Penney continue to suffer. The stock has plunged 56% during the past 12 months through yesterday.
Because of the long-distance commuting, decision-making has slowed down and created friction between the new executives and long-term employees, Bloomberg notes. Some of the long-term employees have been called DOPEs, short for "dumb, old Penney employees," the story adds. A company spokeswoman told Bloomberg she had never heard the term.
As for the commuting executives, the company said several are "in the process of setting up permanent residence here and are moving to the Dallas area."
The spokeswoman added: "With all the travel retail leaders do, it doesn’t always make sense to uproot and relocate their families, move them away from friends and family to a new city -- only to be gone traveling to visit vendors, stores or overseas."
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