J.C. Penney’s transformation under CEO Ron Johnson hit yet another speed bump, as the company posted its worst results yet.

The 1,100-store retailer lost $985 million over fiscal year 2012—with more than half of that coming in the company’s fourth quarter. In that period (ended Feb. 2), the company posed a net loss of $552 million. Total sales equaled $163 million, a 28.4 decrease from the prior year. Comparable store sales declined 31.7 percent. Internet sales fell 34.4 percent. 

For the full year, comparable store sales declined 25.2 percent. Total sales decreased 24.8 percent to $12.985 billion. According to Bloomberg, that is the company’s lowest annual revenue since 1987.

The company did reduce its debt by $250 million and ended the year with $930 million in cash and cash equivalents. 

In a conference call following the release of the results, Johnson admitted that instituting his “fair and square” pricing policy was a mistake, for which he takes “personal responsibility.”

Our customer “loves a sale, at times she loves a coupon, and she always wants a reference price,” he said. “So we have brought back sales. We have brought back coupons for our rewards members, although we still call them gifts and we’ll offer sales each and every week as we move forward.”

But he added the company did well with jewelry on Valentine’s Day, which he credited to selling the pieces at less than the appraised value supplied by the International Gemological Institute. 

“While the industry offered hard-to-believe savings of 70 percent to 80 percent off their jewelry prices, we offered a shallower discount off of the true value and delivered a box of [See’s Candies] to boot,” he said. “Our jewelry business grew 36 percent over 2012 on only a 20 percent discount. And the expensive category such as Modern Bride and diamond stud earrings actually performed 31 percent better … The combination of a real appraisal, great everyday value, and a shallow discount works.”

In a statement, Johnson said that while “sales and consumer traffic were below our expectations,” the actions that Penney has taken will improve the company’s long-term growth and profitability. 

“Looking ahead, we are energized by our shop roll out plans for 2013 and the exciting work our teams are undertaking to transform the store,” he added. “Combining a new marketing campaign focused on style and value, incredible new brands and updated merchandise, with continued enhancements to the customer experience both in our stores and on jcp.com, we are working towards reconnecting with our core customer while attracting new customers to jcpenney.”

 

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