The 10 Weirdest Things J.C. Penney's CEO Told Wall Street Last Week

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CEO Ron Johnson
By Jim Edwards

J.C. Penney just had one of its worst quarters ever: Sales declined 23 percent to $3 billion, same-store sales fell 22 percent, and internet sales sank 33 percent to $220 million.

It's all the fault of CEO Ron Johnson, who embarked on a disastrous relaunch of the company in January which confused customers and drove them away from stores.

To halt the collapse, Johnson was forced to turn off all its TV ads, cancel a July catalog that was already printed, and scrap July's newspaper coupons.

On his conference call with Wall Street analysts, Johnson described his vision for getting the chain back on track in the remaining months of the year. He intends to redesign every store so that it features up to 100 small "shops" set along a "street," like an internal mall. Checkouts will take a back seat to roving staffers carrying iPads, who will execute cashless transactions. "It will be just like Apple: boom, boom, boom," he said.

In describing the plan, Johnson flipped back and forth between delusional cheerleading and upfront confessions of his mistakes. What follows are all direct quotes from Johnson, from the transcript of the call:

The 10 Weirdest Things J.C. Penney's CEO Told Wall Street Last Week

"The first and most encouraging thing to me is I am completely convinced that our transformation is on track. We are making extraordinary progress in everything we're doing."

"In haircuts, it's pretty incredible. Today we will cut on our tenth day of this effort to help Americans look better, help the kids look better. We'll do our 500,000th haircut, free haircut. And today customers will book their millionth appointment during the month of August to get a haircut.

"We're reducing the money on television. We'll still run television and we're investing heavily in the traditional traffic driving median, so be in the newspaper and we think that's going to be good."

"We're going to go paperless. ... Imagine a retail store without any paper except the signs, because everything will be done digitally through iPods and iPads and those are our priorities and those are all priorities within the next 12 to 18 months."

"Well, for the first 10 days with our new marketing, our traffic is down 7% to last year, which is a dramatic improvement."

"We're inspired by Selfridges. Selfridges is the leading department store in the world. You ask any retailer what's the number one department store? They will all say Selfridges."

"It's a place to refresh and we're going to have coffee bars and juice bars and place to get food, that's 25-square feet of space, but by putting out a few tables that have no cost, where we used to have cash wraps, no one has to leave the store if they want to refresh, they can grab a cup of coffee while someone shops and continue to stay in the store and continue to shop."

"We've rolled out Wi-Fi, but we really don't have a lot of use for it."

"What happens in a big mall of a 1 million square feet, about 600,000 square feet goes to the anchors and the common area which leaves about 400,000 square feet for the stores and the stores average 3,000 to 4,000 square feet. So, you run the math, you have about 100 to 120 stores in a typical mall we're in. We'll have just as many shops with inside JCPenney and that's what we call it a specialty department store. It's like a mall within a mall.

"Yeah, we're very anxious to communicate our pricing to our customer and we have failed at that, right? They were confused. Now, we have a pricing strategy that they understand. We have done focused groups around the country over the last 30 days with our new pricing strategy and they all say, we get it, whereas before, they were confused."

"At Apple our stores were busy when we only had Macs. Then we added the iPod; they got busier. We added the iPhone; they got busier yet. We added the iPad, and they got busier. The same thing will happen here. Next spring it's Joe Fresh, Martha Stewart, all our new partners. It will be just like Apple: boom, boom, boom."

As analyst Bill Dreher of Newedge USA told Johnson on the call, "I want to applaud you for creating one of the most exciting stories in retail write-down."

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