J.C. Penney

J.C. Penney to Offer Free Kids Haircuts, Bill Ackman's Master Plan?

In an unusual move to grab some business from its competitors and add sales, J.C. Penney Company, Inc. (NYSE:JCP) announced on Monday that will start offering free children’s haircuts.

J.C. Penney to Offer Free Kids Haircuts, Bill Ackman's Master Plan?

Through a customer email, CEO Ron Johnson said that beginning in November, kids in kindergarten up to sixth grade can get the free haircuts on Sundays at J.C. Penney Company, Inc. (NYSE:JCP) stores.

The news comes on the heels of the company’s earlier announcement of its trial run of free back-to-school haircuts for kids. Johnson said, according to CNN, that the promotion had been “far bigger than I expected.”

This led to the company to give away more than 1.6 million free haircuts last month.

For those familiar with Johnson, the promotions may not come as a surprise. The former Apple Inc. (NASDAQ:AAPL) executive joined J.C. Penney in 2011. He had been responsible for the Apple Store retail chain.

In his short tenure, Johnson has been trying to give the retailer a face lift through a number of initiatives.

In February, the company revamped its pricing from its usual sales and discounts to a three-tiered pricing structure: everyday low prices, month-long sales on seasonal items and “best prices,” or clearance promotions. Upon review, Johnson said customers were confused by the change and prices were instead revised to two levels: everyday low prices and clearance.

The company also introduced shops dedicated to specific brands such as Levi’s and Liz Claiborne in its bigger stores. It also is moving toward the elimination of checkouts by 2014; it will instead utilize mobile and self-checkouts.

But Johnson will face his share of challenges as he attempts to turn around the company. In May, J.C. Penney Company, Inc. (NYSE:JCP) got rid of its dividend program and suffered its greatest plunge on its stock. In the second quarter, the company lost $147 million. This represented a number almost three times greater than analysts’ estimates.

In the summer, J.C. Penney said it would slash hundreds of workers at its headquarters in Plano, Texas. The company was looking to this as an opportunity to help it achieve $900 million in expense savings and reach its cost-reduction goals ahead of its initial restructuring plan.

But there’s more. Last week, the company announced a new women’s product line that has been created with the magazine, Cosmopolitan.

It will include a collection of lingerie, sleepwear, shoes and handbags with a “fun, fearless female” feel. The styles will deviate from the usual “dowdy” J.C. Penney wear and will include leopard-print panties, satiny robes and nighties, snakeskin-patterned clutches–just to name a few. The most expensive items come from footwear, which will reach a high of $95.

The items have been created by Cosmo’s editorial team along with J.C. Penney design teams and will be available at stores and online.

Will all the changes help J.C. Penney’s share price? Probably not. It looks a bit like a desperate ploy to get more shoppers come to the store. Bill Ackman’s Pershing Square is the largest share-holder of J.C. Penny, and has been a strong proponent of the new strategy by Ron Johnson. Maybe a better marketing strategy will be to have Bill Ackman provide the haircuts at various locations in the New York metropolitan area.

For the year-to-date, its shares are down 18.32 percent. According to research from Credit Suisse, over the past week, JCPenney’s (-12.8%) cds spreads widened the most out of any company in the ‘fashion sector.’


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