It's a disappointing turn of events for Johnson, the mastermind of Apple's successful retail stores who took the top job at Penney in November 2011. A couple of months later, on Feb. 1 of last year, Johnson launched a new pricing that was designed to wean customers off the markdowns they'd become accustomed to, but that ultimately eat into profits.
He got rid of the nearly 600 sales Penney offered each year for a three-tiered strategy that lowered prices in the store by 40 percent, offered monthlong discounts on some items and periodic clearance events. He also got rid of the word "sales" from the company's marketing.
But customers weren't responding to the changes, so Johnson tweaked his strategy a few times, including bringing back the word "sale" in its marketing last spring. The latest change came this month when Penney began adding back more sales events and putting price tags on half of its merchandise to show customers how much they're saving by shopping at Penney.
In addition to those changes, Johnson has said that Penney is starting to see some positive results from its makeover of stores with sectioned-off shops that feature different brands. The company said the reception has been warm to the 10 mini-shops that it rolled out last fall, including those for Levi's brand and Penney's new JCP line of casual clothes.
Shops for Joe Fresh, which has brightly colored clothes, and a new home area featuring names like Jonathan Adler and Michael Graves will be launching this spring. Other brands will be unveiled in coming years.
But Johnson, who had previously said that the stores would be carved up into 100 mini-shops by the end of 2015, on Wednesday backtracked a bit. "The customer will dictate the timing," he said.
That's not the only thing Johnson said would be left up to the customer. When asked by an analyst whether he still vows to return to sales growth this year, a promise he has made repeatedly and reiterated last November, Johnson appeared to leave the door open. "Ultimately, our return to growth will be dictated by our customer," he said.
Still, the worry on Wall Street is that Johnson won't be able to turn around business fast enough to finance the transformation of its stores. In November, Penney said that it would end the latest fiscal year with $1 billion in cash. Penney winded up ending the year with $930 million in cash, which was better than analysts had feared but below the company's target.
Penney said Wednesday that it had short-term access to $3 billion in short-term capital to finance its multi-year transformation. And customers like Ricky Rodriguez, from Fort Worth, Texas, offer hope that Penney's turnaround plan will work.
"I feel like the guy section is getting more hip," said the 27-year-old who recently bought a dress shirt for $25 at Penney. "I've been going there every other week."
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